Separating SAP From Chaff

(MoneyWatch) 
My recent post accusing Oracle of lying about its chief rival was close enough to the mark to get under Oracle's skin. Still, it had some holes I couldn't fill, not least of which because of different reporting periods for the two companies. But if I had half the accounting skills of my colleague at ZDNet, Dennis Howlett, I could have done a better job of proving my point. I shall endeavor to learn at the master's feet.

At issue, Oracle took a largely specious shot at SAP, contending in the press release accompanying its earnings report this week that it "took market share from SAP in every region around the world." My point, however awkwardly expressed, was that Oracle is comparing its entire revenue to that of SAP, while the companies don't actually compete in all areas; the numbers, which don't lie, show that Oracle's growth is fueled chiefly by database and middleware, not business applications, which is the only area where the two companies compete.

Dennis does a great job of lining up the earnings reports of SAP and Oracle to create more of an apples-to-apples comparison, and concludes, "the revenue patterns look remarkably similar. SAP dipped more sharply at Q3 than Oracle but accelerated faster in Q4." Moreover,

Oracle's Q4 results represent two-thirds of as yet unannounced Q2 earnings for SAP on my basis for comparison. Also remember that while the percentages look starkly different, Oracle is assuming that its only competition is SAP. That's simply not true. Neither is the converse.

In her comments to my post, Oracle's Karen Tillman suggested the gap between Oracle and SAP's numbers would be even more "dramatic" if I stripped revenue from Business Objects, acquired by SAP almost two years ago, out of its reported revenues. She didn't suggest, however, that I strip out revenues from applications vendors acquired by Oracle, including, as Dennis notes as well, PeopleSoft, Siebel, JD Edwards, and Hyperion (also acquired two years ago).

[Image credit: Dennis Howlett of ZDNet]