Are third party Oracle support providers losing momentum?
According to Trip Chowdhry, an analyst at Global Equities Research, his research indicates that TomorrowNow and Rimini Street are losing contracts as customers go back to Oracle support. Both companies service Oracle applications from acquired entities such as JD Edwards, PeopleSoft and Siebel. Why? Oracle's lawsuit against SAP's TomorrowNow has scared a few clients.
Chowdhry uses that theory to beef up Oracle's maintenance revenue by 3 percent to 5 percent. Chowdhry's research is based on interviews with systems integrators, database administrators, independent software vendors and developers. No quantification on how many third party customers bolted is given in the research report. Coupled with other factors like a big Siebel win at ADP Chowdhry slaps a price target of $28 on Oracle.
On the surface, Chowdhry's rationale makes sense. If I were a prospective Oracle support customer I'd fret about the lawsuit too--even if you don't buy the premise. To an IT buyer, the Oracle suit is just another risk factor to weigh against price.
However, it's hard to tell by the numbers whether Chowdhry is on target. Rimini Street in July said it has doubled its client base to 150. And as a private company Rimini Street doesn't have to disclose anything anyway.
As for SAP, its earnings have been solid (not that TomorrowNow would have a big impact on earnings results). And on any revenue line where SAP would put TomorrowNow--support revenue, professional services and other services--showed growth in the third quarter. Although professional services and other service revenue lagged relative to other units in the quarter, up 3 percent to $674 million euros. I have calls and emails into both SAP and Rimini Street for response.
We'll know if Chowdhry's research is on target if Oracle's maintenance revenue heads higher--although another merger--say BEA-- or two may make the comparison difficult. Oracle has also reportedly been "educating" customers on potential violations. Perhaps this education (FUD 101?) is working.