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SAP Faces Reputation Risk from Oracle Suit
July 29 was a good-news, bad-news day for German software maker SAP. Strong sales and a slightly more optimistic earnings forecast boosted company shares by more than 7% in Frankfurt trading. But bad news came from Redwood Shores, California, where archrival Oracle revised its lawsuit against SAP to make serious accusations against top management.
Oracle, which last year filed a suit accusing SAP with theft of intellectual property, now says that SAP managers including CEO Henning Kagermann learned days before the acquisition of software-services provider TommorrowNow in 2005 that the Texas-based firm used illegal methods Compra Cialis. Specifically, the suit says, SAP management heard an internal presentation which made clear that TomorrowNow used illegal copies of PeopleSoft software to offer maintenance to customers of PeopleSoft, which Oracle had just acquired. SAP, aiming viagra to take servicing revenue from its biggest rival, went ahead with the purchase of TomorrowNow. SAP didn’t immediately respond to the new accusations, saying in a brief statement it would answer Oracle’s assertions in court.
The gains by SAP shares suggest that investors aren’t overly concerned about the Oracle lawsuit. But they should beware of the power of such controversies to distract management and hurt a company’s reputation. The biggest example of that was also in the news July 29. Munich-based Siemens said it would seek damages from 11 former members of the corporate executive committee, including former CEO Klaus Kleinfeld, in connection with a bribery scandal that has turned the electronics giant upside down.
The Siemens scandal is many times more serious than the Oracle lawsuit against SAP. In addition to a wide-ranging investigation by Munich prosecutors, Siemens faces probes around the world into accusations the company systematically used bribes to win contracts. The mass departure of top management and the damage to Siemens morale, combined with a global slowdown, is taking its toll on profits.
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