Below is the text of the letter that Microsoft sent to Yahoo!’s Board of Directors:

January 31, 2008

Board of Directors
Yahoo! Inc.
701 First Avenue
Sunnyvale, CA 94089
Attention: Roy Bostock, Chairman
Attention: Jerry Yang, Chief Executive Officer

Dear Members of the Board:

I am writing on behalf of the Board of Directors of Microsoft to make a proposal for a business combination of Microsoft and Yahoo!. Under our proposal, Microsoft would acquire all of the outstanding shares of Yahoo! common stock for per share consideration of $31 based on Microsoft’s closing share price on January 31, 2008, payable in the form of $31 in cash or 0.9509 of a share of Microsoft common stock. Microsoft would provide each Yahoo! shareholder with the ability to choose whether to receive the consideration in cash or Microsoft common stock, subject to pro-ration so that in the aggregate one-half of the Yahoo! common shares will be exchanged for shares of Microsoft common stock and one-half of the Yahoo! common shares will be converted into the right to receive cash. Our proposal is not subject to any financing condition.

Our proposal represents a 62% premium above the closing price of Yahoo! common stock of $19.18 on January 31, 2008. The implied premium for the operating assets of the company clearly is considerably greater when adjusted for the minority, non-controlled assets and cash. By whatever financial measure you use - EBITDA, free cash flow, operating cash flow, net income, or analyst target prices - this proposal represents a compelling value realization event for your shareholders.

We believe that Microsoft common stock represents a very attractive investment opportunity for Yahoo!’s shareholders. Microsoft has generated revenue growth of 15%, earnings growth of 26%, and a return on equity of 35% on average for the last three years. Microsoft’s share price has generated shareholder returns of 8% during the last one year period and 28% during the last three year period, significantly outperforming the S&P 500. It is our view that Microsoft has significant potential upside given the continued solid growth in our core businesses, the recent launch of Windows Vista, and other strategic initiatives.

Microsoft’s consistent belief has been that the combination of Microsoft and Yahoo! clearly represents the best way to deliver maximum value to our respective shareholders, as well as create a more efficient and competitive company that would provide greater value and service to our customers. In late 2006 and early 2007, we jointly explored a broad range of ways in which our two companies might work together. These discussions were based on a vision that the online businesses of Microsoft and Yahoo! should be aligned in some way to create a more effective competitor in the online marketplace. We discussed a number of alternatives ranging from commercial partnerships to a merger proposal, which you rejected. While a commercial partnership may have made sense at one time, Microsoft believes that the only alternative now is the combination of Microsoft and Yahoo! that we are proposing.

In February 2007, I received a letter from your Chairman indicating the view of the Yahoo! Board that “now is not the right time from the perspective of our shareholders to enter into discussions regarding an acquisition transaction.” According to that letter, the principal reason for this view was the Yahoo! Board’s confidence in the “potential upside” if management successfully executed on a reformulated strategy based on certain operational initiatives, such as Project Panama, and a significant organizational realignment. A year has gone by, and the competitive situation has not improved.

While online advertising growth continues, there are significant benefits of scale in advertising platform economics, in capital costs for search index build-out, and in research and development, making this a time of industry consolidation and convergence. Today, the market is increasingly dominated by one player who is consolidating its dominance through acquisition. Together, Microsoft and Yahoo! can offer a credible alternative for consumers, advertisers, and publishers. Synergies of this combination fall into four areas:

Scale economics: This combination enables synergies related to scale economics of the advertising platform where today there is only one competitor at scale. This includes synergies across both search and non-search related advertising that will strengthen the value proposition to both advertisers and publishers. Additionally, the combination allows us to consolidate capital spending.

Expanded R&D capacity: The combined talent of our engineering resources can be focused on R&D priorities such as a single search index and single advertising platform. Together we can unleash new levels of innovation, delivering enhanced user experiences, breakthroughs in search, and new advertising platform capabilities. Many of these breakthroughs are a function of an engineering scale that today neither of our companies has on its own.

Operational efficiencies: Eliminating redundant infrastructure and duplicative operating costs will improve the financial performance of the combined entity.

Emerging user experiences: Our combined ability to focus engineering resources that drive innovation in emerging scenarios such as video, mobile services, online commerce, social media, and social platforms is greatly enhanced.

We would value the opportunity to further discuss with you how to optimize the integration of our respective businesses to create a leading global technology company with exceptional display and search advertising capabilities. You should also be aware that we intend to offer significant retention packages to your engineers, key leaders and employees across all disciplines.

We have dedicated considerable time and resources to an analysis of a potential transaction and are confident that the combination will receive all necessary regulatory approvals. We look forward to discussing this with you, and both our internal legal team and outside counsel are available to meet with your counsel at their earliest convenience.

Our proposal is subject to the negotiation of a definitive merger agreement and our having the opportunity to conduct certain limited and confirmatory due diligence. In addition, because a portion of the aggregate merger consideration would consist of Microsoft common stock, we would provide Yahoo! the opportunity to conduct appropriate limited due diligence with respect to Microsoft. We are prepared to deliver a draft merger agreement to you and begin discussions immediately.

In light of the significance of this proposal to your shareholders and ours, as well as the potential for selective disclosures, our intention is to publicly release the text of this letter tomorrow morning.

Due to the importance of these discussions and the value represented by our proposal, we expect the Yahoo! Board to engage in a full review of our proposal. My leadership team and I would be happy to make ourselves available to meet with you and your Board at your earliest convenience. Depending on the nature of your response, Microsoft reserves the right to pursue all necessary steps to ensure that Yahoo!’s shareholders are provided with the opportunity to realize the value inherent in our proposal.

We believe this proposal represents a unique opportunity to create significant value for Yahoo!’s shareholders and employees, and the combined company will be better positioned to provide an enhanced value proposition to users and advertisers. We hope that you and your Board share our enthusiasm, and we look forward to a prompt and favorable reply.

Sincerely yours,

/s/ Steven A. Ballmer

Steven A. Ballmer

Chief Executive Officer

Microsoft Corporation

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IBM (NYSE: IBM) today announced it is expanding its business event processing software portfolio by acquiring AptSoft Corporation, a privately-held software company based in Burlington, Massachusetts. Financial details were not disclosed.

(for now) ebizQ received the following:

AptSoft technology helps businesses uncover the cause-and-effect relationships among seemingly disparate business events that occur in milliseconds or throughout defined periods of time. AptSoft’s business event processing software further illustrates IBM’s commitment to pursuing the service oriented architecture (SOA) market opportunity and will complement IBM’s existing SOA software and related services offerings that span the WebSphere, Information Management and Tivoli brands as well as RFID and Web 2.0 capabilities and industry-specific solutions.

Business event processing software helps customers identify patterns and establish connections between events and then initiates a trigger when a trend emerges. The role of event processing is becoming increasingly important because it enables companies of all sizes and industries to proactively analyze and respond to minute market changes that can have significant business impact. This allows companies to seize critical business opportunities or mitigate risks before they negatively affect their ability to compete.

“We welcome AptSoft into the IBM SOA portfolio and look forward to further extending our leadership position in the business events market. Aptsoft enables customers to capture events as they happen with an intuitive user interface designed for business analysts,” said Tom Rosamilia, general manager, IBM WebSphere software. “AptSoft complements IBM’s SOA strategy and augments our business events capabilities to help our customers maximize their existing investments in SOA.”

AptSoft technology will strengthen IBM’s SOA and business process management (BPM) offerings through its simple, intuitive interface and correlation capabilities, which are designed to be easily used by business analysts and information technology (IT) professionals.

Business event processing can also be used in a variety of ways: in the massive multi-player online game industry for uncovering potentially unscrupulous activities among the tens of thousands of movements per second; by e-commerce vendors to help identify fraud and reduce abandoned shopping carts; by healthcare providers to inspire patients to make healthier lifestyle choices based on information pooled from various medical software applications; and by trading markets to uncover and compare minute changes throughout global markets to support buy/sell decisions as well as ensure the timely execution of bids. In addition, it can be used by retailers to proactively alert them about the success or failure of a product as goods move off the shelf, allowing them to make changes to pricing, inventory and marketing campaigns in real time; and by fleet management companies, to help them make instantaneous decisions on how to deal with products that are lost in transit or delayed due to unforeseen circumstances.

“As SOA continues to evolve, companies are linking event processing and BPM to gain deeper insight into the transactions and events that shape their business and industries as a whole,” said Frank Chisholm, former CEO and founder of AptSoft. “On behalf of the AptSoft team, we look forward to integrating AptSoft products with IBM’s offerings to help ensure the alignment of business and IT which will lead to greater customer success.”

AptSoft technology further extends investments IBM is making in business event processing and business process management, which include WebSphere Event Broker, WebSphere Business Monitor, WebSphere Application Server, DB2 Real-Time Insight and Tivoli NetCool products.

AptSoft products will become part of the IBM Software Group WebSphere software brand.

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From David Mitchell, Senior VP of IT Research at Ovum:

“This deal has gone through various phases of public posturing, with executives from both BEA and Oracle making statements on what would or would not be acceptable commercial terms. In reality it was always likely that the bid would go ahead and that negotiations would take place behind the scenes – unless, of course, the much speculated white knight bid from another industry giant emerged. The price paid is “on the full side” and represents a good return for the BEA stock holders.”

“The middleware market is one of the most significant markets within the technology industry, with competitors like Oracle, IBM, Microsoft and BEA vying with numerous niche technology providers. It is also a market that has been consolidating and will to continue to consolidate yet further. It is a hot market, with strong growth and lots of interesting dynamics - new entrants, new technologies, integration with legacy, evolving standards, etc…. Oracle has already amassed a range of middleware products from organic development and through other acquisitions, assembling these into Fusion Middleware. BEA products are likely to form a part of this domain, with its standards-based architecture allowing this to happen.”

“Oracle has been successful in three elements of its enormous acquisition spree and we expect these to continue into the BEA acquisition. Firstly, it has a very solid structural integration programme that ensures that as little distraction to business operations as possible is experienced. This sees the main elements of integration completed with 30-90 days. Key within this area is the integration of the sales and go-to-market teams, to ensure that little loss of sales traction is found. This has ensured that Oracle has been able to cross-sell and up-sell within their account base with some notable level of success. Recent strong revenue figures give evidence for this trait. Second, Oracle has brought together its various products into a relatively coherent architectural vision around Fusion, both for applications and for the underlying technology. Thirdly, it has re-assured customers about existing investments through guarantees over the longevity and support of existing products.”

“We expect Oracle to focus on these three themes. We also expect that Oracle’s appetite is still not satiated, although the volume of medium to large scale targets on the market is now reducing. Expect the next moves to be in the industry specific applications category.”

Ovum's primary activity is providing value-added advisory services and consulting to retain and project clients. The company acts as a well-respected and trusted source of industry data, knowledge and expertise on the commercial impact of technology, regulatory and market changes. Ovum engages in continuous research and industry analysis to determine market dynamics in its specialist sectors.

Ovum has developed long-standing relationships with many of its corporate clients, which include major international blue-chip companies such as Alcatel-Lucent, AT&T, BT, Cable & Wireless, Cisco Systems, Deutsche Telekom, Fujitsu, HP, IBM, Microsoft, Telstra and Vodafone.

Ovum is part of the Datamonitor Group, which is wholly owned by Informa plc.

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Well, the day has finally arrives. The deal is done. Ding, dong, the witch is dead (?) Rome has fallen. Goliath has slain David (or whatever).

Oracle today announced that the beast had fallen to the previously hostile takeover situation and is buying BEA for $8.5 billion, or $19 per share in cash. ZdNet has a good blog about it here.

I will compile other news about this as it happens. For now, here is the release from ebizQ.

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Listen to or download the entire 9:50 podcast below:

Download file

Editor's note: Last week's acquisition of Cognos by IBM continues to fuel discussion about consolidation in the Business Intelligence marketplace, and the large enterprise IT providers now all have a major BI tool in their stack. The following is a transcription of a podcast which discusses this news in the context of the entire market. For questions and comments, and to learn more or participate in ebizQ editorial podcasts, please reach Elizabeth Book at editor@ebizq.net. Participants of this podcast are Beth Gold-Bernstein (BGB); Tony Baer (TB); Michael Dortch (MD); and Marc Andrews (MA.)

BGB: Welcome, everyone, to this ebizQ podcast. I'm Beth Gold-Bernstein, VP of the ebizQ Training Center. With me today on this podcast are Tony Baer, Principle of OnStrategies; Michael Dortch, Senior Analyst at Aberdeen Group and an ebizQ blogger; and Marc Andrews, Program Director of Data Warehousing at IBM. I want to welcome all my panelists. Thank you for joining me.

Today, we're discussing IBM's acquisition of Cognos. Now, Tony Baer pointed out in his excellent blog post, which you can read on our site, ebizQ.net, that barely a month ago, SAP announced that it was buying Business Objects and roughly eight months ago, Oracle announced its acquisition of Hyperion and now, IBM yesterday announced its intention to buy the last independent tier I pure play business intelligence vendor, Cognos.

Now, Tony -- where does this deal place IBM competitively in the market? Is this merely a case of catch-up, or does it give IBM some competitive advantage?

TB: Well, I think the bottom line is that it really fills the hole in the donut for business intelligence for IBM. And that, for the past several years, it seemed that as part of its larger information management strategy that IBM was building a BI strategy, which had everything except BI in it. I mean, originally, IBM had sort of backed into this market with an old OEM deal with Hyperion and back then, we always kept, you know, the conventional wisdom was "Why didn't IBM buy Hyperion?" We're talking about five, six, seven years ago.

To read the rest of this transcript, click here!

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A statement by BEA today in response to the "unsolicited proposal" offer from Oracle:

BEA Systems (BEAS) today confirmed that its Board of Directors has received an unsolicited proposal from Oracle (ORCL) to acquire BEA Systems for $17.00 per share in cash. Consistent with its fiduciary duties, and in consultation with its financial and legal advisors, the Board has reviewed the proposal and the substance of recent management conversations with Oracle, and concluded that the proposal significantly under-values BEA Systems. Therefore, the Board of Directors authorized the following response letter, which was delivered to Oracle on Thursday, October 11, 2007 (prior to Oracle having publicly released its proposal).

11 October 2007

BEA is being advised by Goldman, Sachs & Co. and Wachtell, Lipton, Rosen & Katz.

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Neil Macehiter of the firm Macehiter Ward-Dutton, says that IBM is the big winner in all of this. "Suddenly, customers looking for a middleware backbone that’s independent of their applications suite are left with only one credible candidate."

Neil said he can’t say the Oracle acquisition of BEA comes as a great surprise, particularly with Icahn upping his stake in BEA. "I think this makes it more likely that BEA will accept the offer."

"I see this primarily as a market share grab by Oracle. It does plug some gaps in the portfolio – particularly around BPM (based on BEA’s Fuego acquisition); adds some telecoms vertical market capabilities and the virtualisation work that BEA has done with the JRockit engine. Also, there’s the opportunity for Oracle to tap into the healthy Tuxedo base.

"This is yet another example of the big specialist players getting squeezed out by the industry goliaths – IBM, Microsoft, Oracle, SAP – and the open source, smaller best-of-breed players. SAP’s acquisition of Business Objects is another example (although that did plug a few more gaps).

"I see the likes of TIBCO, RedHat and Progress as most threatened by this. Taking market share from BEA would have helped their growth strategies: Oracle is a different kettle of fish.

"BEA has struggled to grow revenue from licenses which is key for a company of its size. Oracle’s profitability comes in large part from maintenance revenue so the maintenance revenue from BEA’s customer base will serve it better.

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Well, looks like another one is biting this dust! Today's news fresh off the presses is that Oracle is recommending to its board a buy of BEA Systems for approximately $6.66 Billion, or $17 a share, in cash.

I'm going to blog on this all day, and am collecting reactions from bloggers, vendors, everybody. So if you have something to say on this, comment or email me at elizabeth (@) ebizq.net.

Raw news here.

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It's not the first time the Germans and the French teamed up, but this time I think there will be happier results.

It was reported over the weekend that Germany's SAP picked up France's Business Objects in a friendly takeover after it put itself on the market in mid-September. See my blog entry about that here.

The price was pretty high, in my opinion. 4.8 billion Euros, or $6.8 billion, making it the largest acquisition in SAP's acquisition-rich history. But some might argue that Business Objects is worth the price it commanded. However, the merger also gives the market share for BI query and embedded analytics software decidedly to SAP. The other competitors in this market are Cognos, Oracle's Hyperion, SAS, and MicroStrategy.

On Monday, shares in SAP plunged due to some analysts comments about the duplicity of SAP's existing programs with companies such as Informatica. When the market closed, SAP was down 4.6 percent. On the other hand, there's probably a lot of cheer in the Business Objects offices this evening, as their shares rose 17 percent.

Please enjoy this released statement from Rob Ashe, CEO of Cognos:

“Cognos now stands as THE Independent Performance Management provider in the market and is committed to giving customers equal access to their entire infrastructure, applications and data sources. This is a great position for us to be in, and it validates the vision we laid out more than 6 years ago: to be the leading independent provider of Performance Management solutions for our customers. We will not waver in that vision and our strategy is based on a number of key beliefs and principles. The majority of the market will gravitate to an ERP-neutral solution because transaction systems are fundamentally different than Decision-making systems, and secondly, the market values specialization for each of these types of systems because it brings the focus, passion and commitment that customers need to be successful. We will continue to pursue an “embrace and extend” strategy for the ERP environments we support -- taking full advantage of what the ERP provider offers, and at the same time, extending to cover other data sources and environments.”

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I recently met with Don Campbell, vice president for product innovation and technology at Cognos, a preeminent performance management and businesss intelligence provider to the world's most well-known companies. If you ever bought a book on Amazon, ate a Hershey Bar or put Heinz Ketchup on your hot dog, be aware that Cognos does their BI, and excellent products aside, good business intelligence tools add to their success in the marketplace.

Don is one of those extra-cool "idea guys," who spoke earnestly and intelligently about the opportunities abounding in the analytics and dashboards business with the addition of Web 2.0 technologies such as enterprise search.

Today, Cognos announces its acquisition of Applix for $339 million. Cognos is presumedly buying Applix for its financial performance management tools.

Applix has been discussed as an acquisition target by a number of companies in the past year. Here's a description:

Applix is recognized as a leader in the financial analytics market. The company and its global network of partners help more than 3,000 customers worldwide manage their business analytics needs. Customers range across a broad variety of industries including insurance, financial services, banking, healthcare, pharmaceutical, telecommunications, manufacturing, consumer goods and retail. Incorporated in 1983, Applix has been publicly traded since 1994. Applix has also been recognized by numerous industry and analyst groups for being a technical and strategic leader in the marketplace, including being positioned in the Visionaries Quadrant of Gartner's CPM Magic Quadrant.

To give others a chance to air their thoughts, Bill Hewitt, Kalido's CEO, says the following: "This is a good move for Cognos as they recognize the need for more high performance analytics - but the fact remains that most BI vendors continue to struggle to get the data to the front end, leaving users with inconsistent, stale or worse, invalid data on which to base their business decisions."

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The M&A team at IBM sure are earning their keep this year!

Today, IBM announced the acquisition of privately held Softech for its Information on Demand business.

IBM reportedly will integrate Princeton Softech’s product offerings into IBM’s Software Group as part of its Information Management Software division.

From the release:

This acquisition furthers IBM's cross-company Information on Demand business initiative by enabling customers to address their escalating information management challenges and improve database performance by segregating historical data from current data and storing it securely and cost-effectively. Princeton Softech’s test data management solutions also help customers protect data privacy and contain costs by creating realistic, right-sized test databases where sensitive data can be masked and protected. The combination of IBM and Princeton Softech will help customers reduce operational costs while avoiding performance degradation and effectively managing their compliance requirements.

The desire by businesses to access, manage and deliver information more efficiently is driving rapid change in the information technology marketplace. Companies grappling with government mandates and business demands are striving to capture and integrate information in a more seamless, real-time fashion across their enterprises. IBM's Information on Demand approach combines industry-specific expertise with advanced software, open standards and storage technology -- integrated via a services oriented architecture -- to manage, secure and deliver information as a service to solve business challenges.

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I don't have a whole lot to say about this acquisition of Proforma by Metastorm today, except that I tried to ask a question during the media call and the conference line must have been broken, because no one asked any questions and they ended the call pretty quickly. It was either that or they were ignoring me (and everyone else who was probably trying to ask questions).

The key point, made by Metastorm's CEO Bob Farrell, is that the new Metastorm Enterprise will "uniquely address the three critical challenges facing organizations today," which are:

Understanding the underlying dynamics of the organization, collaborating to ensure the pieces fit together, and creating agility within the context of overall enterprise strategy and architecture;

Mapping out an end state that maximizes the effectiveness of key business processes, intertwined with other enterprise assets, to achieve strategic objectives;

Executing optimized, effective business processes with cross-functional transparency and the flexibility to adapt and implement new ideas quickly.

I would agree with those points. That is in line with the editorial perspective of ebizQ.

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In light of Google's buy yesterday of Postini for $625 million cash-money, I direct you to a VERY interesting piece in the Washington Post, which basically hails this as part a new strategy by Google Enterprise to target the financial firms which have great compliance pressures and therefore must have extraordinarily reliable security infrastructure. It also continues to keep Google in the game in its competition with Microsoft Office.

The article, by Kendra Matt, is here.

More discussion of the Google/Microsoft battle can also be found in this Businessweek.com article.

Also, Peter Schooff, ebizQ's fearless security editor, did a great podcast with Postini about the dangers of Web 2.0 and what the company was doing to fight spam. I direct you to that informative podcast here.

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Watchfire is a leading provider of web application security and compliance testing solutions. IBM Rational software provides clients with comprehensive software quality management solutions, including the ability to perform functional and performance tests while developing software. With the addition of Watchfire technology, customers will now be able to include security, compliance and quality testing as part of their web application development, which will ensure the business integrity of their applications before they go live. Watchfire technology will also complement existing IBM Tivoli identity, access and compliance management software offerings and ISS by extending security and compliance testing as an integrated element of the application development lifecycle.

Watchfire’s operations will become part of IBM’s Rational software brand, which produced double-digit revenue growth in the first quarter of 2007.

“Web application attacks can expose high-value data such as personal information, customer records and corporate intellectual property, and these attacks are top-of-mind for companies worldwide,” said Peter McKay, Watchfire President & CEO. “Watchfire technology will extend IBM's broad security and compliance product and services offerings to help customers address one of today's most critical and challenging security issues. In addition, Watchfire can seamlessly integrate into IBM's current offerings to provide a more comprehensive solution.”

More as I get it. Will attempt to schedule a podcast with Watchfire's Peter McKay.

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Here we go again!

Business Objects (Nasdaq:BOBJ) (Euronext Paris ISIN code: FR0004026250 - BOB), a provider of business intelligence (BI) solutions, today announced it has entered into a definitive agreement to acquire Inxight Software, Inc. Based in Sunnyvale, Calif., Inxight is a provider of software solutions for unstructured information discovery, including text analytics, federated search, and data visualization. Financial details of the transaction, which is expected to close in July of 2007, were not disclosed.

I am seeking to do a podcast with some executives associated with this acquisition. More news and analysis as I receive it.

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Oracle is having a busy couple of weeks, as are we all. A cool $495 million, or about $8.10 per share is getting them a new product lifecycle management toy, courtesy of their acquisition of Agile Software.

In the words of John Palatto at eWeek, Oracle is continuing on its "relentless campaign of cherry-picking enterprise application software companies," in an attempt to get past and outgrow nemesis SAP.

"Profitable product innovation is critical to product-based industries, making PLM one of the fastest growing application segments," said Oracle President Charles Phillips. "The addition of Agile, which will serve as the foundation of our PLM offering, will further Oracle's strategy of delivering industry-specific enterprise applications and allows us to offer yet another strategic application to SAP customers."

Ridiculous.

"With over 1,250 PLM customers and over 10,000 visualization customers globally, Agile has a proven track record of rapid, successful implementations integrated to a wide range of ERP and CAD systems," said Agile CEO Jay Fulcher. "By becoming part of Oracle we can bring Agile's solutions to a wider audience and accelerate the advance of Enterprise PLM."

Agile Solutions Corp., RIP.

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First, it was rumors about Business Objects being bought by IBM. Then it was Oracle buying Hyperion. Then Business Objects bought Cartesis. Then TIBCO bought Spotfire. Did I miss any?

Then yesterday, SAP announced its intention to acquire OutlookSoft.

And today, here's a roundup of what "the other guys" are saying about the SAP acquisition of OutlookSoft:

Some say this is an out-and-out shot at Oracle in relation to its buy of Hyperion March 1st.

Including this lead in today's International Herald Tribune:

Business software maker SAP AG on Tuesday fired another shot in its duel with Oracle Corp. by announcing plans to buy OutlookSoft Corp. and its line of technology products tailored for budgeting and financial forecasts.

The deal follows Oracle's recently completed $3.3 billion (€2.4 billion) acquisition of Hyperion Solutions Corp., a maker of so-called "business intelligence" software that delves into some of the same areas covered by OutlookSoft's products.

According to Paul Hammerman of Forrester Research, as quoted by Jon Franke on SearchSAP.com, OutlookSoft's performance management product has a Microsoft Excel-based user interface and integrated planning, financial consolidations and business performance analytics capabilities, according to Hamerman. It represents a big improvement on SAP's current performance management product, Strategic Enterprise Management (SEM).

A bit more from Franke's article, quoting Hammerman:

"SAP needed to address the gap it had in planning functionality," Hamerman said. "SAP had a product, but it wasn't great and it was losing out to best-of-breed competitors such as Hyperion and Cognos."

SAP rival Oracle recently acquired Hyperion and, just weeks ago, BI software maker BusinessObjects purchased Cartesis. Combined with Microsoft's plans to address the market with its pending release of PerformancePoint Server, SAP was under the gun to make a move.

"This is a great move for SAP, and the timing was good," Hamerman explained. "SAP had to make a move, because retooling their offering would've taken too long."

John Hagerty of AMR Research (read his full analysis here!) made a few interesting comments about the OutlookSoft performance management product plugging holes in SAP's portfolio:

"When thinking of OutlookSoft, we picture an image of a solid, highly usable, prediction-focused planning, budgeting, and forecasting (PBF) system. Customers, many of which are divisions of larger organizations, have built very responsive and flexible planning systems with the product. The consolidation tool is decent, but used more for budgeting and forecasting rollups and less for complex enterprise consolidations, which is what SAP customers will need and expect. Yet SAP has indicated this acquisition will be positioned as the go-forward products for both functional components."

And the other pure-play vendors are getting in touch with their takes:

"It's clear that application vendors think the way to the business is through the CFO, but in today's fast changing market, financial performance indicators are only one part of the equation," said Bill Hewitt, CEO of Kalido. "Business executives and managers must take more responsibility for managing information if they will remain competitive," Hewitt said.

More as it arrives!

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Today, Red Hat announced its acquisition of MetaMatrix. Financial details were not disclosed.

In a conference call with analysts and press, Tim Yeaton, Red Hat's senior VP of enterprise solutions, said the company plans to make MetaMatrix's tools fully open sourced and available under an open source license.

Red Hat, an open source solutions provider, acquired JBoss last June, and has been working hard to bring an enterprise class product to the market. But I guess they need a bit more of solid service-oriented data integration technology to provide stability, and therefore announced today this big news along with a larger new enterprise middleware strategy.

Check out the raw news here.

Today, Dennis Byron is blogging on this topic.

Also, Vitria and Red Hat are partnering on SOA platform distribution.

More news as it happens.

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Coming hot on the heels of the Software AG/webMethods deal, we now have "something else entirely!" The IONA buy of LogicBlaze highlights the industry's interest in and need for open source SOA convergence.

Thanks to ebizQ's Gian Trotta, we remember (he remembers!) that last September, we talked to Rob Davies, Logic Blaze's vice president of product development, about FUSE's particular features and the evolving balance between open source and traditional SOA vendors. I know you will immediately want to check it out here!

Dennis Byron, our Open Source blogger and IT Investment Research analyst, has lots to say on this deal. Interestingly enough, it was Dennis' estimate of privately held LogicBlaze of $1 million that was used on the analyst call, which IONA neither confirmed nor denied. Check out Dennis' commentary here.

ebizQ blogger Brenda Michelson also linked to blogger Debbie Moynihan, who works on open source initiatives for IONA. Here's her explanation of the buy and her words welcoming LogicBlaze as an integral part of IONA's Open Source Business.

There will be lots more on this soon.

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Just as the SOA industry stopped reeling from the revelation that Software AG had made plans to acquire webMethods, we were met with more news that IONA was buying LogicBlaze. But let's go one at a time.

ebizQ analysts and friends have had lots to say about the Software AG buy, since it is so squarely in our space and since we've been watching both companies (and their apparently divergent business strategies) for so long.

Our VP Beth Gold-Bernstein said that in light of the Software AG purchase of webMethods, both companies have industry leading next generation technology that has been underappreciated in the market. However, she warns that there are some product overlaps that will have to be reconciled, which are sure to shake things up. Read Beth's analysis here.

Neil Ward-Dutton, on the ebizQ MWD blog, says he was most struck by the fact that the Software AG-webMethods deal was not a behemoth buying a minnow, but just a medium-sized software company buying another medium-sized software company. He also noted "one particular feature of the two companies' income statements which is shared: both companies make more money from software maintenance than they do from selling new product licenses." He points out that the benefit of this buy might be more about the acquisition of customers than about technolody tools. Read Neil's great commentary here.

Sandy Kemsley chalks it all up to competition. Read her always insightful, ever pithy entry here.

Andre Yee, ebizQ's Security Insider blogger, made a few comments because he has some familiarity with Software AG. He sees it as a "bold move," and a clear indication that Germany-based Software AG is staking a claim on the U.S. SOA/BPM marketplace. Read Andre here.

Steve Craggs of Lustratus Research (cohort of our friend Ronan Bradley) goes along the lines of Andre here, indicating that this is the first big foray into SOA for a European vendor. He also does take note that there is lots of product overlap. Steven even goes so far as to suggest that Software AG should take on the webMethods' name. Check out Steve's incisive post here.

I didn't even get to tell you about SOA in Action Blogger/Rock Star Joe McKendrick and this fantastic Tony Baer analysis, because I am in the airport in Amsterdam and can't plug in my laptop, but click on their names to read their pieces. Also, Tony posted a followup last night in response to all of his comments. Here that is.

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Thanks to Sara Kaufman for this information.

Jan Dawson, VP of the U.S. Enterprise Practice at Ovum, who closely follows Cisco, sees this move as the latest front in the war between Cisco and Microsoft over Unified Communications, following last week's announcements by both companies at VoiceCon about enhancements to their UC portfolios. “This announcement allows Cisco to leapfrog into first place in the web conferencing space, ahead of Microsoft in the second spot.” Web conferencing and collaboration are going to be increasingly important elements of unified communications in the future, and close integration between these and other forms of communication will be key to allow enterprise end users to collaborate effectively with their colleagues, partners and clients.

The acquisition also has important implications for service providers. “Recent Ovum research reveals that many providers offering web conferencing are partnering with WebEx to deliver these solutions, but are considering moving to other partners such as Microsoft. Cisco will want to secure these relationships on the carrier side as well as building up WebEx's presence in the enterprise and internationally,” says Dawson.

Here's my other entry on the topic.

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Today, it was reported that Cisco has purchased WebEx.

This is clearly a very interesting development, and part of Cisco's "Web 3.0" collaboration strategy, which also smacks of kinds of things Microsoft's Jeff Raikes was saying yesterday about their acquisition of Tellme. I caught an interview of Raikes on Bloomberg TV, and he said some of things there that he said in this article. Microsoft will certainly not be thrilled to know that a web conferencing leader will be part of Cisco.

From Cisco's Chief Development Officer, Charlie Giancarlo:

Many pundits are trying to define Web 2.0 or even predict Web 3.0. What Web 2.0 means to me is straightforward: Web 2.0 technologies allow users to collaborate directly over the open platform of the Internet …collaborating with video, voice and information 24 hours a day, 24 time zones around the world. Web 2.0 is perhaps most evident in the consumer marketplace with social networking sites, mash-ups and video sharing services. This is the “play” part of Web 2.0.

But this collaborative technology will make huge advances in the business effectiveness with online collaborative tools like WebEx’s. WebEx was one of the early leaders in this market and remains a leader 10 years later, making intercompany collaboration accessible and easy for their customers.

Here is more from the news@cisco blog.

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Business Intelligence/Performance Management vendor Hyperion got bought today by Oracle for $3.3 Billion. Did you know 12,000 companies use Hyperion software including 91 of the Fortune 100?

Raw news here.

Meanwhile, several companies, including Cartesis, SAS, Cognos, and OutlookSoft got in touch today to talk about this deal.

"This is good news for Cartesis, however we are concerned for Hyperion's customers," said Crispin Read, Chief Marketing Officer, Cartesis. "Oracle offers alternative products to Hyperion's entire product line. What will the future bring? Which products will make it past Oracle's "fusion” project?

"We have already started to see Hyperion customers switch from Essbase to Microsoft SQL Server and from Hyperion Enterprise to Cartesis Finance. The question is how much this will accelerate.

"Between Oracle CPM, Siebel Business Analytics and Peoplesoft EPM – what will become of Hyperion System 9 Applications?," asked Read.

Russ Cobb, Senior Director of SAS's global marketing and training programs, said that SAS has been preparing for something like this for a long time, and Cobb reported that SAS sees the acquisition as "one of our smaller niche competitors being taken out of the market."

"Everyone had been seeing a shakout coming in the BI space, whether it was going to be IBM/Cognos, IBM/Business Objects, then most recently, Business Objects and Hyperion. The rumors have been flying and we have been expecting consolidation.

"Both from the Oracle press release and our own assessment, this is the Oracle/SAP battle. This is good news for us. We looked at Hyperion as a competitor in the PM space and to a smaller extent in the BI space. So we will see a lot of openings in current sell cycles.

"More good news for us as well is that we are vendor-agnostic when it comes to database or ERP vendors, so we can work with Oracle's and SAP's database/ERP systems and others, and have been for a long time," said Cobb.

Cognos, whose shares fell 64 cents, or 1.7 percent, to $37.47 today (1:28pm EST), is considered a likely takeover candidate for Germany-based SAP. However, Cognos' Les Rechan, the company's COO, put a positive spin on the news. He said that Oracle's intention to acquire Hyperion is "a game-changing event for our market and opens up a tremendous opportunity for Cognos."

"Our customers are benefiting from many of our “first to market” innovations in our applications, mobile solutions and Services Oriented Architecture – all key enablers of the most encompassing Performance Management and Business Intelligence solution in the market, "said Rechan.

"As an independent Performance Management provider, Cognos customers will continue to receive innovation on a rapid and regular basis – that are based on customer and market needs -- that only an independent leader can provide."

OutlookSoft CEO Phil Wilmington also had a few comments on the acquisition today. “This is an obvious business move for Oracle as they are buying up legacy application maintenance bases. However, for the customers of both companies, it’s potentially a bad move since they have no clear product roadmap. It’s going to take Oracle months to figure out a strategic product plan, and years to deliver on an effective one. Oracle has once again created a quagmire for customers— no one knows which products will ultimately survive the acquisition. Hyperion will likely be absorbed into the financial arena of the Oracle suite while other capabilities will simply fade.

“Consolidation is going to continue to happen this year. We view this as a distinct market opportunity for OutlookSoft to show Hyperion customers what’s available to them NOW in terms of Performance Management innovation – not 12 months from now," said Wilmington.

"Moving forward, customers will continue to demand pure-play BPM and not bolt-on pieces of technology, which presents a major opportunity for pure-play vendors in the space. Two big players will no longer dominate the space.”

Yahoo has an interesting article on the acquisition today too, which quotes our analyst partner AMR's Bruce Richardson. It shares some of his excellent analysis of the situation.

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In ebizQ's continuing coverage of vendors in our space, last week's acquisition of Reactivity by Cisco is major news.

According to Cisco, "The acquisition demonstrates Cisco's commitment to the expanding Application Networking Services (ANS) Advanced Technology segment, which is an important part of Cisco's Service-Oriented Network Architecture (SONA) strategy and vision.

"Cisco ANS provides customers with shared application-aware services to improve the availability, performance, and security of applications delivered from the network platform. Reactivity complements and extends the capability of Cisco's ANS portfolio for these emerging application architectures."

ebizQ has been covering Reactivity for a long time, and we've continually been impressed with Reactivity’s technology, that seeks to "deliver security, reliability, and scalability functions in an application-oriented networking layer." Reactivity says they were the first to introduce XML firewalls, and they continue to lead with innovations that simplify and scale XML-based integration and Web service delivery.

Billed as the only "scaleable, comprehensive, and cost-effective solution for infrastructure-enablement capabilities, our Intelligent XML-integration technology implements the best practices standard for SOA and Web 2.0 networks," Cisco is surely making an interesting foray into Service-Oriented networking with this acquisition.

Cisco will pay approximately $135 million in cash and assumed options of Reactivity. The acquisition is subject to various standard closing conditions, including applicable regulatory approvals, and is expected to close in the third quarter of Cisco's fiscal year 2007, ending April 28, 2007. Reactivity was founded in 1998 and has 56 employees in Redwood City, Calif.

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Confirming rumors that have been circulating since early in January, Adobe has acquired Antepo, Inc. From the horse's blog.

Some reasons why from Mike Gotta of Burton Group, and from David Coleman of Collaborative Strategies.

According to Adobe:

Antepo is a technology company that developed the Antepo Open Presence Network (OPN) System — an award-winning platform for Enterprise Instant Messaging and Presence capabilities — enabling real-time communication and collaboration while meeting critical business requirements for control, security, integration, and compliance.

The Antepo technologies and expertise acquired will support the development of Adobe's products and solutions for knowledge workers. The addition of Antepo's Presence and Enterprise Instant Messaging solutions will further expand the capabilities of the Adobe® Acrobat® software family for enabling knowledge workers to communicate and collaborate with confidence.

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IBM (NYSE: IBM) yesterday announced a definitive agreement to acquire Softek Storage Solutions Corporation, a privately held company based in Vienna, Virginia. More details as we get 'em. Putting in a request this morning to lay down a podcast with Steven Murphy, president and chief executive officer of Softek.

ebizQ received the following:

The acquisition of Softek is the latest example of IBM's continuing strategy to blend software, hardware, and research into higher-margin, standardized services that can be used with multiple clients to help them transform their businesses.

IBM will integrate Softek's data mobility technology and best practices with IBM's methods and expertise in storage and data services. As a result, IBM and its business partners will help clients increase the flexibility, efficiency and reliability of moving data, enabling them to quickly respond to market needs and seize new opportunities.

Softek's patented Transparent Data Migration Facility (TDMF) solution enables a simple, unified approach to the non-disruptive movement and management of data across storage vendor platforms and operating system environments, as part of an information technology (IT) infrastructure change. By using Softek's solutions, clients can improve their ability to migrate data while keeping data online and applications available for end users.

Businesses increasingly require the ability to cost-effectively move data in a standard, reliable and timely manner, without impacting business operations. IBM has a significant opportunity to meet the market need for a standard solution for data migration, while extending its leadership in storage and data services.

"As data capacity and compliance requirements continue to increase, companies depend on continuous access to their business-critical information," said Val Rahmani, general manager, IBM Global Technology Services. "Softek's data migration technology will complement IBM's Information on Demand strategy and significantly bolster our Storage and Data Services portfolio."

Softek's clients include British Telecom, KeyCorp, Lufthansa, the Principal Financial Group and more than half of the Fortune 1000 companies. IBM has been a Softek global partner since 1996, and has used Softek's award-winning products to migrate data on thousands of services engagements worldwide. In addition to IBM, Softek has a strong global network of partners, distributors and resellers.

"Clients are looking for greater flexibility and choice when selecting solutions that can reduce the risk and complexity associated with managing and moving data regardless of distance or vendor," said Steven Murphy, president and chief executive officer of Softek. "Our market-leading TDMF solution is trusted by many of the world's top companies to move data non-disruptively. We are excited to become a key player in IBM's strategy to provide clients a simple and unified portfolio of services that help them minimize business interruptions when optimizing and transforming their businesses."

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Today it was announced that MetaMatrix' Enterprise was selected by the Defense Logistics Agency’s Integrated Data Environment (DLA IDE) program, which is just the latest United States Department of Defense (DoD) program to select the MetaMatrix suite of data-integration products to help implement their data strategy and transformation efforts. I spoke with Ed Fakler, Vice President, U.S. Federal Government Sales, MetaMatrix, to hear more about this interesting customer win.

Check it out!

Download This (right click, save as)

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"webMethods has long recognized the opportunity for enterprises to extend reuse to their entire portfolio of IT assets, including services, business rules and processes, data and infrastructure. This is in sharp contrast with our competition's more limited view of reuse," said David Mitchell, president and CEO, webMethods, Inc. "This acquisition advances our vision for reuse by enabling us to offer our customers the most advanced, standards-based technology for managing the underlying metadata that is essential to the reuse of all IT assets."

"Despite the image typically presented by most modeling tools, business processes are both dynamic and transitory. With each component of the process possessing its own rules, parameters, and interrelationships, which frequently change based on a variety of circumstances, more complex processes simply breakdown due to the incompatibility of many of these interrelationships," said Marc Breissinger, CTO, webMethods, Inc. "When used to enrich a specific process, semantic metadata helps overcome inconsistencies by providing a higher level of agreement to meaning and intent. This allows for the richer orchestration of the transactions and interactions that fundamentally define the process. The end result is that semantic metadata enables higher levels of automation, more assured decision-making and greater efficiency throughout the process."

Read the full release here.

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I spoke with Manoj Saxena about IBM's acquisition of his company, Webify, about IBM's new foray into SOA industry verticals, and about IBM's overall SOA plans. Listen in!

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Initial thoughts from ebizQ columnist and OnStrategies' President Tony Baer:

Extended Tony Baer commentary here.

IBM's acquisition of FileNet had an almost anticlimactic air about it. In retrospect, the more obvious question is what took IBM so long? Heck, it’s been almost three years since EMC bought Documentum.

IBM has recently been on a binge in acquiring some of its closest partners, witness last week’s MRO acquisition. FileNet is no different. While company officials couldn’t answer off the bat how many joint engagements they have, they are clearly no strangers to each other. And even where formal joint engagements leave off, clearly FileNet has enough IBM Global 2000 customers that there is large potential for the deepening its footprint.

Regarding the urgency, there's little secret that it’s all about compliance. Despite all the grumbling, SOX is not likely to go away anytime soon. And thanks to recent publicized security breaches from VA, AOL and elsewhere, neither are privacy protection laws. Companies under stronger mandates than ever to protect the veracity and confidentiality of their data, and they are going to require more robust management tools in place to track who retrieved what and when. For IBM and others, there's clearly lots of money to be made helping customers pick up the trail of breadcrumbs.

From a technology standpoint, the acquisition of FileNet is a logical follow-on to its two-year old Venetica buy, which literally put the pieces in place enabling IBM's Information Integration tools to access the trove of unstructured data sources, such as FileNet.

And with FileNet, IBM is acquiring a fairly healthy company with sufficient market presence and name recognition to retain its own brand name once inside IBM's Data Management business fold. And with IBM, FileNet gains a huge service channel to upgrade more of the installed base to the more dynamic, workflow-enabled P8 product architecture that gets beyond the domains of traditional image management. That's a work that's still in progress.

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IBM (NYSE: IBM) and FileNet Corporation (NASDAQ: FILE) today announced that the two companies have entered into a definitive agreement for IBM to acquire FileNet, a publicly held company based in Costa Mesa, Calif., in an all-cash transaction at a price of approximately $1.6 billion, or $35 per share.

More here and as soon as I have it.

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According to David Linthicum's "other blog," IBM is gobbling up its second company in the same week.

From MRO Software:

IBM (NYSE: IBM) and MRO Software, Inc. (Nasdaq: MROI) today announced the two companies have entered into a definitive agreement for IBM to acquire MRO Software Inc., a publicly held company based in Bedford, Mass., in an all-cash transaction at a price of approximately $740 million, or $25.80 per share. The acquisition is subject to MRO Software shareholder and regulatory reviews and other customary closing conditions. It is expected to close in the fourth quarter of 2006.

MRO is the leading provider of asset and service management software and consulting, used by many of the world's top companies to efficiently manage how they buy, maintain and retire assets - such as production equipment, facilities, transportation and information technology (IT) hardware and software - in a wide variety of industries including utilities, manufacturing, energy, pharmaceutical, and telecommunications. This acquisition builds upon IBM's strategy to leverage business consulting, IT services and software to develop repeatable tools that help clients optimize and transform their businesses.

As more types of corporate assets are touched by technology, companies are looking for ways to consolidate how they manage these assets - both operational and IT-related. IBM's acquisition of MRO addresses this need by providing customers with a consistent, comprehensive set of asset management solutions and services. MRO asset management technology and consulting services will be integrated into IBM Software and IBM Global Services offerings. As a result of the acquisition of MRO, IBM will be the only company to provide the solution to this convergence of IT and industrial assets.

Full release here.

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Solstice Software

"HP, Mercury, and Systinet now provide a strong solution for governance, monitoring, and testing," says Chris Benedetto, Vice President of Marketing for Solstice Software.

"This is good news for HP customers looking to embrace SOA to simplify the complexity in their environments. The next step is to see what solutions they provide for testing and validation of everything that is happening
behind the screens and at the application level. That's the layer that supports the SOA, so it will be interesting to see where they take this," said Bendetto.

"This is a big move f