But Wait, There's More
Sun's Schwartz Dreams Big About Buying Big Blue's Server Biz
After giving a speech last week at the Securities Industry Association Technology Management Conference, Jonathan Schwartz, Sun Microsystems's president and chief operating officer, said something so silly that had I been actually drinking coffee when I read the report in Red Herring, the coffee would have come out my nose or I would have spit it across the room involuntarily. Lucky for me, I had already had the morning coffee when I read that Schwartz--presumably as a big joke, but you can't tell with his dry humor--said Sun was still on an acquisition binge and that, get this, Sun was interested in buying IBM's server business.
With what, Jon? Bill Gates' money? The gross domestic product of a small European country?
Let's think about this for a second, just for fun. Nearly all of IBM's revenue is derived directly or indirectly--and mostly indirectly--from its server business. Big Blue sold off its disk drive and PC businesses recently and has long since ditched its printer, terminal, networking, and application software units. The vast majority of IBM's middleware and operating system sales come from its own server lines, although Big Blue does sell software on other people's iron, particularly in the Linux and Windows markets, sometimes in the Unix space. Ditto for services: the majority of IBM's services revenues is on IBM iron, but a larger percentage of services have to do with integrating disparate systems, to be fair, or providing services that are not tied specifically to any piece of iron or architecture. Still, most of the value of IBM's $121 billion market capitalization comes from--again, either directly or indirectly--its server business. It is hard to imagine IBM not having a value of at least $250 billion in any acquisition--if not more. And Sun, which has one-tenth of the market cap of IBM and only a few billion bucks in cash, has no way of acquiring even a piece of IBM's server business. Period.
What Sun needs to acquire is a line, and then place it on the floor, and then teach Schwartz not to step over it when he speaks. While Schwartz has talked up a large number of good ideas in his short tenure as the number two exec at Sun, this idea is just plain laughable.
EMC, Sun Partner on Solaris 10
Sun Microsystems used to be one of the biggest resellers of storage arrays from EMC a couple of years back, and they had a very nice relationship until Sun figured out that it could make more money by partnering with Hitachi and rebadging Hitachi's enterprise storage for its own Sparc/Solaris customers. Since then, Sun and EMC have been competitors--just like Hewlett-Packard and EMC have become as well for exactly the same reason.
But Sun wants its Solaris 10 operating system to be adopted by a wide installed base, and that means it has to reckon with EMC. Similarly, EMC very much wants to sell its storage hardware and software into the Solaris base. And to that end, the two companies have inked an agreement that will see EMC port its PowerPath, Legato NetWorker, and Documentum software to Solaris 10 and Sun and EMC work to ensure compatibility between Sun's server platforms and EMC's storage platforms. As part of the deal, Sun is also reselling an OEM version of EMC's Legato NetWorker backup and recovery software and the two companies are offering combined tech support for the product.
CodeWeavers Readies Windows Support on Intel-Based Apple Iron
CodeWeavers is best known for the CrossOver systems software that allows certain Windows-based applications to run inside Linux-on-Intel machines. CodeWeavers says that more than 100,000 Linux-based desktops are using its software to run Windows apps, in fact. And now that Apple has decided to move to Intel-based hardware for its desktops, laptops, and servers starting in 2006 and culminating in a complete X64 product line in 2007, CodeWeavers will be right there with Apple, providing a way to run Windows apps on Intel Macs.
The reason CodeWeavers can do this, of course, is because Apple's Mac OS X operating system is based on top of the BSD variant of Unix, which is very similar to Linux in most of the important features and APIs. Now that Mac OS X will be on Intel iron, creating a version of CrossOver for Mac OS X is not that tough. Because of the differences between the Power and Intel architectures, creating a version of CrossOver that could run the binaries of X86 applications on Power iron is pretty tough.
While CodeWeavers was touting its future CrossOver products for the Apple line, it will be interesting to see if Apple just goes the obvious route and licenses Microsoft's Virtual Server, VMware's ESX Server, or uses the open source Xen virtual machine to allow Windows applications to run natively on the X64 iron and be done with it.
IT Managers Still Sleepless Over Security Issues
When you see words like deadly and crippling used to describe security threats, you can be pretty sure the words that follow will wipe the smile of the face of any IT manager. That's assuming you've seen an IT manager smile in the first place. According to Gartner research, IT managers don't have much to smile about. Their minds are tortured with thoughts about the potential havoc created by viruses and worms. And they fear their current defense systems--firewalls, intrusion detection and protection, and anti-virus software--is inadequate protection.
Based on a Gartner survey that garnered responses from 133 North American organizations with global operations and revenues exceeding $750 million, 50 percent of the respondents increased IT security spending in 2005 and expected to do so again in 2006. Seven of 10 considered their systems and processes more secure than a year ago, mainly because better security controls now are in place.
In a Gartner forecast from earlier this year, the research firm predicted revenue for the security software sector would grow at a compound annual growth rate of 16.2 percent through 2009, with new license revenue reaching $11.4 billion. Market growth will be bolstered by a strengthening economy, stimulus from government regulations, and new types of security threats.
Spending priorities--beyond firewalls, intrusion detection and protection, and anti-virus software--include patch management, strong user authentication, remote access, vulnerability assessment, user provisioning or identity management, security event correlation and reporting, spam filtering, and Web site filtering or blocking.
Malicious employees within the organization ranked eighth on the list of critical threats.
SSA Global's Underwriters Exercise Over-Allotment Option
Underwriters of a recent public offering of SSA Global Technologies common stock have exercised the over-allotment option to purchase 1,350,000 shares. Based on a public offering price of $11 per share, the company will receive additional net proceeds, after underwriting discounts and commissions, of approximately $13.8 million, which will result in total net proceeds from the offering of approximately $100.9 million. The closing of the over-allotment option is expected to occur June 21, 2005, and is subject to customary closing conditions.
This news comes two weeks after the company's third quarter report for fiscal year 2005, which revealed SSA recorded double-digit growth in both revenue and adjusted net income compared to the third quarter of 2004. Total revenue for the third quarter rose to $180.4 million, an increase of 10 percent from $164.5 million in the previous third quarter. Software license revenue was $52.5 million, up 27 percent comparing year-to-year figures. Software license revenue grew 16 percent and represented 29 percent of total revenue for the quarter.
SSA Global is a provider of extended ERP solutions for manufacturing, distribution, retail, services, and public organizations. In addition to core ERP applications, SSA Global offers performance management, customer relationship management, product lifecycle management, supply chain management, and supplier relationship management software. The company has headquarters in Chicago, and 63 locations worldwide.
SSA claims its products are used by approximately 13,000 active customers in more than 90 countries.
IBM Fires in U.S. and Europe, Hires in India
Sometimes, I get the distinct impressions that the people who run the world's major corporations and who, not coincidentally exert the more influence over the economy than governments or individual people, think we are all idiots. And maybe we are, since we have not all incorporated ourselves and set the terms for our own employment. But that is another issue. The issue that set my teeth on edge is a story in The New York Times and yet which gave me no surprise whatsoever is a report by Steve Lohr, who got his hands on an internal IBM memo that says Big Blue is going to hire some 14,000 new employees in India just after it has said it will cut some 10,000 to 13,000 workers, mostly in its services unit and mostly in Europe.
Now, I understand globalization. I have worked for a London company for 16 years in one form or another as well as companies in the States. I understand the need to have local workers in local expanding markets. But the kind of talk that Bob Moffat, a senior vice president quoted in the story, was talking is just nonsense. "People who say this is simply labor arbitrage don't get it," Moffat told Lohr. "It's mostly about skills."
No, it isn't, Bob. It's about profits, plain and simple. It is about the price/performance of workers, and that is what the H1-B visa influx was also all about. It is not about skills, as the millions of unemployed IT workers who were let go since the dot-com bubble will tell you. While I understand that IBM's services business needs to cut costs and there are lots of people in India and China who have the skills to do the work that was formerly done in the States and in Europe--and to do so at a fraction of the cost--what I cannot tolerate are executives who don't call it like it is. The fact is, IBM just put a lot of people out of work, and that effect will ripple through a lot of lives. And no corporation ever concedes this publicly, and I doubt any one ever did privately, either. If IBM has to fire people, so be it. But tell it like it is.
Symantec Shareholders Clear Acquisition of Veritas
Shareholders of security software vendor Symantec have approved the acquisition of data management software vendor Veritas, paving the way for a completion of the deal next week. The acquisition will create the world's fourth largest software company, behind Microsoft, Oracle, and SAP.
When Symantec and Veritas announced the deal last December, many viewed it as a strategy to defend against Microsoft, which is moving forward with plans to introduce new antivirus and backup and recovery products, by having a strong base of Windows, Unix, and Linux products. John Thompson, Symantec's chairman and chief executive, denies that's the motivation, instead saying it's about expanding its reach into enterprise shops. Meanwhile, Symantec has gone ahead with two new product launches, including Symantec Enterprise Security Manager (ESM) 6.5, which brings improvements aimed at streamlining regulatory compliance, and a beta version of the Symantec Security Information Manager 9500 Series appliance, which works with Symantec's ESM software to ensure that users are updated with the latest security intelligence updates, including automated security alerts, known vulnerabilities, safeguards, and attack signatures.