Five questions: SAP's acquisition of Business Objects

Five questions: SAP's acquisition of Business Objects

Summary: SAP took a rather big plunge with its $6.8 billion acquisition of Business Objects and left the business intelligence market much smaller than it was a day ago.


SAP took a rather big plunge with its $6.8 billion acquisition of Business Objects and left the business intelligence market much smaller than it was a day ago.

Here are some lingering questions that remain to be resolved:

Can SAP digest a large acquisition? Business Objects is SAP's largest acquisition (Techmeme, statement) and represents a sea change since the ERP giant has touted its organic growth in recent years relative to Oracle's acquisition strategy. As a result, SAP is untested when it comes to integrating big deals. Business Objects will run as a separate unit, but it's hard to believe that situation will last indefinitely. Part of SAP's calculus with the Business Objects deal is to stay within the EU--that plan should ease any management and cultural hurdles.

Why the switch? SAP has lambasted Oracle's acquisition strategy. What caused the attitude change? Was it the goal of reaching 100,000 customers? The appeal of the midmarket? As Dennis Howlett notes, SAP just validated Oracle's strategy. Look for Oracle to crank up the FUD machine. Wall Street analysts opine that its unlikely SAP will follow Oracle's path completely. SAP wants to get the Business Objects acquisition right before pursuing others.

How long can Cognos stay independent? Now that Business Objects is off the table there are few large business intelligence players left. Cognos is now the big dog. In conversations with Cognos executives, the company has staked out being independent as an advantage. That's true to a degree--Cognos will most likely wind up being an Oracle unit along with Hyperion. Perhaps Microsoft would be interested in Cognos. Bank of America analyst Daniel Cummins said in a research note that Cognos has similar products to Business Objects but has a tighter focus on "strategic operational and financial applications (as supposed to tools to build such applications)." In any case, Cognos will be in play.

What caused Business Objects' profit warning? SAP is paying a 19 percent premium for a company that just issued a profit warning. Few noticed, but Business Objects cut its third quarter outlook as soon as the SAP deal was announced. Business Objects now sees third quarter revenue of $366 million to $370 million and earnings of 36 cents a share to 39 cents a share. The previous guidance called for revenue of $382 million to $387 million and earnings per share of 43 cents a share to 47 cents a share. Thomas Weisel analyst Tom Roderick dismisses Business Objects' profit warning to "pipeline management" ahead of the SAP merger. But the miss does make you wonder given Cognos reported a strong quarter.

Did SAP pay too much? A case can be made that SAP paid too much. SAP paid a premium to Business Objects closing price of $50.27 on Friday. The problem: Business Objects closed at $44.97 on Sept. 28. What a difference a week makes.

Topics: Banking, Enterprise Software, SAP

Kick off your day with ZDNet's daily email newsletter. It's the freshest tech news and opinion, served hot. Get it.


Log in or register to join the discussion
  • WOW Crystal Reports Visual Studio

    Sunday found me with a human resources guy from Microsoft. He was explaining 360 reviews and how post-Enron Microsoft had gone to all narrative reviews so that it would not be possible to score those reviewed and then can the bottom 10 percent as Enron had done. He was itching to tell me something else, but eventually decided not to. Now I suspect it is that Crystal Reports will be added back into Visual Studio. SAP is the largest vendor to Microsoft. This would be the easiest of sales for them.
  • RE: Five questions: SAP's acquisition of Business Objects

    Search Engine Marketing Conference & Expo 2007, Hong Kong
    The Advanced Event for Search Engine Marketing & Optimization Comes to Hongkong, with update knowledge and case study targeting both Chinese and English market.
    Search Expo ( Search Engine Marketing Conference & Expo ) is the China based conference series that keeps asian marketers ( as well as international marketers ) informed about search engine marketing and optimization issues in Chinese and English market, especially the Simplied Chinese market. These events teach you the ins-and-outs of chinese search engine marketing skill, knowledge and techs from top experts in the field, along with information from the chinese search engines themselves. These events also teach you global ( English ) search marketing skills and strategies to attract businss leads or brand awareness
    Search Expo is initiated by Timev Media from China. Timev Media has the most efficient network with china leading SEO/SEM companies and their pros. Timev Media opitmizes all the resources and the conference content, bring the bilingual SearchExpo to serve the asian marketer, advertisers and search engines.
    It is time to mark you calendar because you need to be in Hong Kong at SearchExpo, Nov 8th-9th, 2007

    Event Overview

    1.This Hong Kong event will be a bilingual one, in both Chinese and English
    2.Organized by search authorities Inway Ni, SES Xiamen 2007 Programming Director, VP of Timev
    3.Delivers real-time actionable information you need to grow your business through Search Engine Marketing.
    4.Teaches the ins-and-outs of search engine marketing from top search experts and the search engines themselves.
    5.Provides a unique setting to network with fellow marketers and search engine industry professionals and discuss the trends in search engine marketing.
    6.Grants access to the world's most comprehensive gathering of search engine marketing & optimization-related solutions providers and potential partners & affiliates.
    7.Search Engine Marketing Conference 2007 features presentations and panel discussions that cover all aspects of search engine-related promotion.

    Who you will meet

    1.Global SEM/SEO gurus
    2.Chinese SEM/SEO experts Stone Chen, Eric Yao and 4-6 well-selected experts
    3.Search Engines from Hong Kong and mainland China.
    4.Advertisers' marketing directors .
    5.B2B and Yellow Pages and their marketers

    What You Will Learn

    1.Who are the major search engines beyond baidu, google, yahoo?
    2.How to market and optimize with characterbased content?
    3.How to efficiently purchase listings guaranteed to rank your company at the top of search engine results.
    4.How to understand the Chinese internet users' behavior?
    5.How to find and work with local partners?
    6.How to monetize on the massive grass-root web sources?
    7.How search engines list Web sites for free and through paid placements?
    8.How to get free "organic" traffic by building a site that pleases search engines and your visitors ?
    9.How to efficiently purchase listings guaranteed to rank your company at the top of search engine results?
    10.How to calculate the ROI of your search marketing efforts by tracking your visitors from the time they hit your site until they buy???and get tips on improving conversion if they don't?
    11.How to build links that generate traffic to your Web site, and how to avoid the penalties of "spamming" the search engines?
    12.What's coming next in the constantly evolving world of Web search, and how you can profit from those changes?
    13.How to evaluate each B2B and online yellow pages?

    Contact US???
    tel:86-592-5769777 86-592-5769935