SAP raises offer for Retek - what will Oracle do?
Business software maker SAP has this week increased its offer for retail software maker Retek by 29 percent, intensifying a takeover tug-of-war with industry rival Oracle.
SiliconValley.com reports (17 Mar.) that SAP's US$11-per-share bid for Minneapolis-based Retek tops an Oracle offer of US$9 per share made after Germany-based SAP had already struck a deal at US$8.50 per share. Based on Retek's outstanding stock as of 25 February, SAP's all-cash bid is worth US$617 million, nearly two times Retek's market value before the auction began.
The online news servce says that although Retek's board of directors unanimously accepted SAP's sweetened offer, investors appeared confident that Oracle would raise the stakes once again.
Oracle did not return calls seeking comment, SV.com said, adding that analysts had said they would be stunned if Oracle doesn't up the ante.
SV.com says that when Oracle entered the bidding last week, the company's management vowed to keep Retek out of SAP's clutches, although the executives stopped short of promising to win at any cost.
If it prevails, Oracle would have to pay an even higher surcharge. As part of its new deal with Retek, SAP raised the break-up fee to US$25 million, up from US$15 million previously. Retek would likely require Oracle to pay the fee, says SV.com.
SV.com says the gamesmanship pits the world's two leading makers of business applications software -- the computer coding that automates a wide range of administrative tasks. SAP has long been the industry leader, but Oracle closed the gap two months ago by buying PeopleSoft for US$10.3 billion after a heated battle that dragged on for 18 months.
According to SV.com, Oracle is still trying to cobble PeopleSoft's operations into its own as it strives to boost its profit by at least US$400 million in the fiscal year ending in May 2006. That formidable task has caused some analysts to question the wisdom of pursuing another deal, but Oracle management believes Retek can be easily digested because it's so small, says the publication.
SV.com says that with just US$174 million in annual revenue and 525 employees, Retek is a niche player in the industry. Nevertheless, the company holds tremendous appeal for both SAP and Oracle because its 200 customers are retailers -- a group that hasn't bought as much business applications software as many other industries, the publication adds.
By acquiring Retek, SAP and Oracle are betting that they will be better positioned to sell an array of software products to retailers looking to upgrade their technology, says SV.com
PalmOne returns to profit, but forecast disappoints
PalmOne returned to profitability in the latest quarter from a loss a year ago, but the company forecast earnings for the current quarter below Wall Street's expectations.
SiliconValley.com reports (17 Mar.) that the maker of cell phones and hand-held computers has just announced that it earned US$4.4 million, or 9 cents a share, on revenue of US$285.3 million in the fiscal third quarter ended 25 February.
Excluding items, earnings were US$10.6 million, or 21 cents a share, in line with analyst expectations. In the previous year, it lost US$9.3 million, or 20 cents a share, on revenue of US$242.5 million, reports the publication.
The company forecast fourth-quarter earnings, excluding items, of 25 cents to 32 cents a share, on revenue of US$320 million to US$330 million.
Court upholds patent claims against eBay
In the US., a federal appeals court has this week handed at least a temporary victory to a Virginia man who claims that eBay has been infringing on several of his patents.
SiliconValley.com reports (17 Mar.) that upholding a lower-court decision, the US Court of Appeals for the Federal Circuit said there is "substantial evidence" that eBay's fixed-price online marketplace violates a patent held by MercExchange. The court said an injunction against eBay -- which might freeze its fixed-price business and which a lower court had rejected -- may be warranted.
SV.com reports that the court also reinstated MercExchange's claim that San Jose-based eBay is infringing a broader patent involving online auctions, the core of eBay's business. The court sent that claim back to the lower court for a possible trial.
The publication says that the 30-page ruling did not go entirely against eBay, however. The court threw out another MercExchange patent involving an online comparison-shopping tool.
The implications of the ruling were not immediately clear. MercExchange's attorneys will return to court to seek an injunction ordering eBay to suspend its "Buy it Now" feature. That feature allows buyers to purchase an item immediately instead of going through the auction process. More than 30 percent of eBay's sales involve the fixed-price feature, reports SV.com.
EBay has maintained that it has changed the technology behind its "Buy it Now" feature and that it is not infringing any patents, reports the publication.
No news on HP's CEO search
Hewlett-Packard shareholders hoping for news about the company's search for a new chief executive walked away from the company's annual meeting this week disappointed, a mood that matched sentiments about the computer and printer giant's performance.
The Mercury News reports on SiliconValley.com (17 Mar.) that as the meeting began, HP's non-executive chairman, Patricia Dunn, told shareholders the company would not answer any questions about the search to replace Carly Fiorina, whom the board ousted last month.
Some shareholders raised questions about Fiorina's US$21 million severance package, the company's ability to innovate and whether HP is considering spinning off its highly profitable printer business, The Mercury News reports.
US caution: internet phone start-ups could bust in a boom
By most appearances, the Internet telephone industry is on the verge of a boom. But will it happen?, q uestioned SiliconValley.com in a 16 march report.
SV.com says the excitement generated by the net phones was palpable among the 6,000 or so techies, entrepreneurs and investors who converged on the San Jose Convention Center last week for an industry shindig.
The publication says there was talk of the first internet telephone IPO, which some people said could be to the "voice on the Net" revolution what the Netscape IPO was for the dot-com boom.
And, the departing chairman of the US Federal Communications Commission,reportedly received an enthusiastic reception for championing the government's hands-off approach to industry regulation.
But, says SV.com, the boom may never materialise, at least not for the entrepreneurial crop of firms that make up the industry. The pubklication says that paradoxically, it is government policy that could derail the industry's high hopes. For all the excitement about keeping government at bay, this is an industry that's facing many policy battles, and its odds of winning them are long, SV.com adds.
According to SV.com, for starters, most internet telephone services depend on broadband lines that they don't own and to which they don't have guaranteed rights to access. That wouldn't matter if consumers could choose from a multitude of competing broadband providers. But they can't, says the publication.
SV.com says the broadband policy championed by the FCC, and largely supported by the tech industry, is well on its way to creating a cable and telephone broadband duopoly, for the time being. Further, as the government works to deregulate that duopoly, it is vesting cable and telephone firms with tremendous power to treat services that need access to their lines, such as Net phones, as they wish. That could include outright blocking of internet calls, or more subtle forms of discrimination such as poor connections to 911 services or favoring their own Internet telephone traffic, the publication adds.
Second, the industry is hoping that it will be treated kindly in the regulatory melee that allocates costs in the interlocking telephone network. In other words, it hopes that it will be charged only the lowest fees when one of its customers places a call to a customer of a traditional or wireless telephone firm, SV.com says.
Third, the industry may have made too much of the one regulatory battle it has won. The decision by the FCC to assert its authority over internet telephones and keep state regulators at bay may yet be challenged in court, observes SV.com
SiliconValley.cm. says,however,that none of this is to say that Net phone calls won't revolutionise voice communications. It's just that the winners (in the US)are likely to be the Bells and the cable companies, and perhaps others with name recognition and a large customer base -- Microsoft or AOL or Google or Amazon -- could be players, too, says the publication.
DreamWorks animation boosted by 'Shrek 2'
Helped by home video revenue from "Shrek 2," DreamWorks Animation easily exceeded analyst expectations for earnings in the fourth quarter -- its first full quarter as a US public company.
SiliconValley./com reports (17 Mar.) that the company has said its net income for the quarter ended Dec. 31 was $192 million, or $1.99 per share, compared to a loss of $36.6 million, or 48 cents per share in the same period last year.
The publication says that the company also reported net income as if taxes had been due for the entire year and as if its distribution agreement with sister company DreamWorks SKG had been in effect for the entire year. Under that agreement, DreamWorks Animation pays an 8 percent fee to DreamWorks to distribute its films to theatres.
On that basis, net income was US$168 million, reports SV.com.
Revenue for the quarter was US$495.7 million, compared to revenue of US$134.6 million in the same period last year.
SV.com reports that the company said "Shrek 2" generated more than US$360 million in home video revenue in the fourth quarter, while the film "Shark Tale," released on 1 October, generated US$62 million of fourth quarter revenue.