Oracle Sues SAP, Overstates Business Progress

The Cowboys and Redskins. The Yankees and Red Sox. Rocky Balboa and Apollo Creed. And now we have another great rivalry on our hands: Oracle (Nasdaq: ORCL  ) and SAP AG (NYSE: SAP  ) .

Enterprise-software specialist Oracle is suing German rival SAP on the grounds of massive data theft and unfair competition. The complaint (PDF) says that an employee of SAP subsidiary TomorrowNow acquired and used login information from Oracle customers to illegally download tons of proprietary documents and software.

TomorrowNow provides technical support for SAP products, but also for competing software like Siebel and PeopleSoft -- both of which are part of Oracle now -- at substantial discounts to the official Oracle-backed support.

SAP spokesman Steve Bauer told me that his company had just been served with this suit and wouldn't comment on the lawsuit until the allegations have been investigated. That's standard procedure, so I also took the opportunity to ask him about Oracle's market-share claims in its recent earnings report -- information about which he was far more forthcoming.

Where Oracle CEO Larry Ellison said that "SAP has been struggling to maintain growth in the U.S., the world's biggest market," Bauer noted that SAP has recorded more than four years of consecutive double-digit software license revenue growth in the U.S., quarter by quarter. The company has also "shown consistent gains in market-share growth and customer-satisfaction improvements during that period." That doesn't strike me as "struggling," to be sure.

Bauer noted that Ellison underrepresented SAP's license sales growth, both for the most recent quarter and full year of 2006. And he says that SAP signed more software licenses in the fourth quarter alone than Oracle did in all of 2006, so Oracle's claim of "closing the gap consistently and rapidly" is invalid, too. I must note, though, that Oracle likes to swing for the fences, landing bigger deals on average. You can judge whether massive unit sales override respectable dollar volume.

This is shaping up to one of the all-time great market rivalries, like Google (Nasdaq: GOOG  ) versus Yahoo! (Nasdaq: YHOO  ) , or a higher-stakes version of Netflix (Nasdaq: NFLX  ) versus Blockbuster (NYSE: BBI  ) . But the tough talk is way more interesting in this battle. With this lawsuit on the docket, we can expect plenty more barbs to shoot either way across the Atlantic for the foreseeable future, regardless of business results.

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Fool contributor Anders Bylund holds no position in any of the companies discussed here. You can check out Anders' holdings if you like, and Foolish disclosure is always juicy reading.


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