Oracle CEO Larry Ellison testified in court Monday that if Oracle and SAP had negotiated for PeopleSoft and Siebel software licenses when SAP acquired TomorrowNow, Oracle would have asked for about $4 billion. Oracle's co-president, Safra Catz, who followed Ellison on the witness stand, said it would have been at least that much. These echo numbers former co-President Charles Phillips estimated earlier in the trial.
Unfortunately, for all of them perhaps, Oracle's damages expert, Paul Meyer, put the number at around $1.5 billion for PeopleSoft, mostly because he was limited by some legal wrangling over documents Oracle didn't produce during pre-trial discovery. Meyer has yet to reveal numbers for Siebel; his testimony continues on Tuesday morning. During a quick impromptu news conference outside the courthouse, Oracle's star attorney, David Boies, put his guess at between $1.5 and $2 billion in damages, "based on what [Meyer] can quantify."
The promise of Ellison's live testimony packed the courthouse, albeit after a lengthier security process than in prior days; his tardiness caused some visible angst among the Oracle legal team, which moved to yet another routine video deposition, much to everyone's chagrin. Perhaps Ellison's handlers merely needed a few extra moments to finish declawing the notoriously feisty competitor.
Indeed, when Ellison finally took the stand, he was the epitome of courtliness. It's unclear why the jury needs to hear from the parade of Oracle executives, each with a vested interest in ratcheting up the damage figures, but it's great drama. When asked about the effect of not being able to protect its intellectual property and its investment in research and development (he estimated $65b spent over Oracle's history; $4b to be spent this year alone, coincidentally), Ellison, said to be the world's sixth richest person, proclaimed "We'd be pretty close to going out of business." I thought I saw a juror weep.
Ellison based his $4b estimate on what he says was his 2005 projection of the number of customers SAP would have been able to win, saying, "if we had licensed SAP to have access to all of our bug fixes and regulatory updates and new versions -- in other words, the rights to all of our engineering output -- my estimate is that they would have been able to get more than 20% of PeopleSoft customers to move away from Oracle to SAP." His figure for Siebel was between 10 and 15%.
SAP's legal team maintained in its opening statement last Tuesday that damages should be determined based on a "running royalty" agreement, whereby SAP would pay for those licenses based on SAP's success. Ellison, like every other witness from Oracle, practically laughed at that notion. "We paid up front for PeopleSoft and Siebel," Ellison said, "so we took the capital risk for those technologies . . . if SAP wanted to compete, they'd have to take the upfront capital risk." Or, as the plucky Safra Catz said later: "We had to pay up front. We didn't pay for PeopleSoft on layaway."
Greg Lanier, who has done most of SAP's cross-examination, treated Ellison with some hostility, trying to agitate the CEO at every step -- about Ellison's lack of memory concerning customers lost to SAP/TomorrowNow and about public statements regarding Oracle's Fusion strategy (announced in 2005, due in 2008, and being delivered only next year). The last of those gave some PeopleSoft and JD Edwards customers a bit of heartburn when they were announced, but Oracle claims that it addressed those concerns not only by asserting its support of PeopleSoft and JD Edwards customers, but also by executing on those promises.
SAP's counsel also continued to use internal Oracle emails to showcase how Oracle's executive management team was unconcerned about the TomorrowNow strategy.