Oracle Corporation et al v. SAP AG et al

Filing 1201

Declaration of Tharan Gregory Lanier in Support of 1182 Statement Declaration of Tharan Gregory Lanier iso Joint Statement Regarding Exhibit Objections filed bySAP AG, SAP America Inc, Tomorrownow Inc. (Attachments: # 1 Exhibit 1, # 2 Exhibit 2, # 3 Exhibit 3, # 4 Exhibit 4, # 5 Exhibit 5, # 6 Exhibit 6, # 7 Exhibit 7, # 8 Exhibit 8, # 9 Exhibit 9, # 10 Exhibit 10, # 11 Exhibit 11, # 12 Exhibit 12, # 13 Exhibit 13, # 14 Exhibit 14, # 15 Exhibit 15, # 16 Exhibit 16, # 17 Exhibit 17, # 18 Exhibit 18, # 19 Exhibit 19, # 20 Exhibit 20, # 21 Exhibit 21, # 22 Exhibit 22, # 23 Exhibit 23, # 24 Exhibit 24, # 25 Exhibit 25, # 26 Exhibit 26, # 27 Exhibit 27, # 28 Exhibit 28, # 29 Exhibit 29, # 30 Exhibit 30, # 31 Exhibit 31, # 32 Exhibit 32, # 33 Exhibit 33, # 34 Exhibit 34, # 35 Exhibit 35, # 36 Exhibit 36, # 37 Exhibit 37, # 38 Exhibit 38, # 39 Exhibit 39, # 40 Exhibit 40, # 41 Exhibit 41, # 42 Exhibit 42, # 43 Exhibit 43, # 44 Exhibit 44, # 45 Exhibit 45, # 46 Exhibit 46, # 47 Exhibit 47, # 48 Exhibit 48, # 49 Exhibit 49, # 50 Exhibit 50, # 51 Exhibit 51, # 52 Exhibit 52, # 53 Exhibit 53, # 54 Exhibit 54, # 55 Exhibit 55, # 56 Exhibit 56, # 57 Exhibit 57, # 58 Exhibit 58, # 59 Exhibit 59)(Related document(s) 1182 ) (Froyd, Jane) (Filed on 8/2/2012)

EXHIBIT 51

21

Fair Market Value License Negotiation Framework
Negotiation Factors*

Oracle's
Negotiating
Perspective

./ Scope and Duration of the License
./ Need for the Copyrighted Works
./ Risk Acceptance

What is Oracle
Giving Up?

./ Competitive Relationship of the Parties

SAP's
Negotiating
Perspective

What is SAP
Gaining?

./ Goals/Business Plans Related to the Copyrighted
Works
./ Expected Financial Benefits/Impacts
./ Values not Quantified

1----'-

'---

----

--~---~

---

~mount That SAP Would be Reasonably 1
Required t.Q Pay Oracle at
n

the Time of the Infringement

*Consistent with Georgia-Pacific Corp. v. U.S. Plywood Corp.

-4-

PeopleSoft License- SAP Negotiation Factors
Negotiation Factor

t::\
\!:../

SAP's Goals for New
Offering
---

{:;\ SAP's Expected Impact
\.V on Oracle

./ Offering PeopleSoft Maintenance is Step 1 of "3Step Plan" to Convert Customers to SAP
./ Impact Oracle's Return on $11.1 B Investment by
Taking PeopleSoft Customers
./ SAP Increased Revenue Equals Oracle Revenue
Impact

{.;\ SAP's Expected
'V Financial Gains

./ $897 Million in Only 3 Years
./ Expected Customer Conversions of 2,000 to 6,000
./ SAP Expected Gains of $881 M to $2.698

ORACLE'

t=:::,;T
-16-

PeopleSoft License - Key SAP Documents

12/15/2004

Executive Board Meeting Minutes
(PX0003)

X

2 I

12/20/2004

"PeopleSoft 1-2-3" (PX0006, PX0008)

X

3 I

12/23/2004

"A Roadmap For PSFT Customers to
SAP" (PX0012)

X

41

1/5/2005

I "PeopleSoft 1-2-3" Version 1.2 (PX0015)

51

1/16/2005

I

"Safe Passage: Winning Customers and
Markets from Oracle-PeopleSoft-JD
Edwards" (PX0141)

61

1/19/2005

I SAP Conference Call (PX0023)

71

1/20/2005

81

1/25-26/2005

1

SAP Executive Board
Agassi, Oswald, Mackey

X

X

Agassi, Apotheker,
Kagermann, Oswald

X

Agassi, Oswald, Shenkman,
Mackey and Others

X

X

X

Apotheker, Agassi, Oswald,
Homlish, Ziemen, Mackey and
Others

I

X

X

X

I Public

Executive Board I "Safe Passage:
Winning Customers and Markets from
1
1
Oracle-PeopleSoft-JD Edwards" (PX0024,
PX0151)

X

X

X

I SAP Executive Board

1

"TomorrowNow Integration Meeting"
(PX0161)

X

X

X

Oswald, Ziemen, Nelson, Ravin
and Others

I

17-

PeopleSoft License - SAP's Expected Financial Gains
(Factor®)
"A Roadmap For PSFT Customers to SAP" I 1212312004 (PXOo 12)

Agassi Apotheker
I Kagermann~ Oswald,
'
'

2

"Safe Passage: Winning Customers and
Markets from Oracle-PeopleSoft-J.D.
1
Edwards - Executive Overview"- 1/16/2005
(PX0141)

Apotheker, Agassi,
Oswald, Homlish,
Ziemen, Mackey and
Others

3

1

4

"Safe Passage: Winning Customers and
I Markets from Oracle-PeopleSoft-JD
Edwards" -1/20/2005 (PX0024, PX0151)

1

SAP AG Phone Conference - 1/19/2005
(PX0023)

5

1

"TomorrowNow Integration Meeting" - 1/2526/2005 (PX0161)

6

1

Deposition Testimony of Shai Agassi,
Former SAP Executive Board Member

Homllsh

Public

SAP Executive Board
Oswald, Ziemen,
Nelson, Ravin and
Others
N/A

• 3,000 maintenance customers by 2007
• Convert 1,375 customers to SAP by 2007
• $897 million in first 3 years
• "Our goal is to convert the majority of the
PeopleSoft and J. 0 Edwards customer base
to SAP"
• "Aggressively convert" 450 of Global 1000
"over the next 30 days"
• Target 4,000 joint SAP customers
• Two common customer scenarios
• Convert 50% of PSFT/JDE customers
(100% of shared customers) to SAP
• 9,920 X 50% =4,690
• 2,000 to 4,000 TomorrowNow customers by
2009
• 60% of PSFT/JOE customers
• 9,920 X 60% =5,952
-21-

"A Road map For PeopleSoft Custom~rs to SAP"
- December 23, 2004 (Factor

0)

;

-

SAP Buslneu Opportunity

,.

...........
cc:.

Uo.SMI. .......

Assumptions

....,..........-...

................................. , ............. Md~l't"-IICIIan

.

lliO

I :H.-.oll,lll

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I

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500

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............................
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..................................... _ .. lllllt~~~l~.

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t::~=L--..·.. 11- ..
-

.. . -

500

~

J't

S!ICIO

~~

I

i 0

$7flll

NQUIUDII-Ar!OUEYS' ETf.aOM.Y

tiM'TWD ltAfQ DllniCT COUitT

ft.........,..

flfOIImfiMK:W"'JJRf#W.....
C...,
""""a.ftiiD.WU

...
-~-~~;::;~;,
..........................

-------------- ,,

S 558.041.000

r

___,.,_...~.....----

11111

so

~ Growth :

:

$5011

~IIGI ...YCOHFllliflffW

UpSwillch

0 Quu :iell
: .~~ ~-lntenancl!

liCIO

·~
$2011

I

r-----

:::E

S4CI1

,.. -- • ... .... -..

0

· ----

2004

, .

~

2005

6 ""'Nl-.n ..,.~r-n/ 111

-fb·:··,'·
·
r

; .

~lt:!f;· j;

:[[

2006

J
2007

TilE aliliT•alHI 8UIOIIME!i.lili5 AUN sap ·

~

••

a

[ PX00121
-24-

"Safe Passage: Winning Customers and Markets from OraclePeopleSoft-J.D. Edwards" - January 20, 2005 (Factors
&

0 0)

r--_ _ __J B
:r

!<
0

~2

!

i!

.~
!

E

;

: ,...
~

J!oo

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:~!

.!

!
I

••
•
.. 'a •
ca
w •

I'Giti
• .,
•

.... -~

.!·~~
.... I: g

~

>

~

~
;

.5!.

.,

<.>

~

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I

l a
z

m;"

.fJl
c» r~

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a
lD

z

~

II!

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0

z

!<

Wll-~r.nw;t.....

The Goal

~ ~Of~
G-. .. . ._.........

Disrupt Oracle' s ability to pay for the
acquisition out of cash flow
• Shrink their share of the application
market
Discredit their efforts to create a
next-generation application platform

~
~

: . . .. . . . . _. . . ,. . . .

Convert approximately 50% of the PeopleSoft and J.D.
Edwards customer installations to SAP (100% of shared
customers)

r.n:p

a

--

IIUf!'f laiillr .... . .

UU.

ac:U

H•IM IIGitJt;:litaoJ& • .,._

,,1.,.

~

.

I

I PX0024 1
-28-

"TomorrowNow Integration Meeting"
- January 25-26, 2005 (Factor0)

TomorrowNow
lnt..,..tlon Meeting
2!1-28 .J•nuary 200S
Business and Resource Planning (1)

CUstomer base for TNow Maintenance Services
54 existing TN ow customers..
plaooed for 2006 Including JOE,

Stephen Tseng

upto

in2009

Scenario 1: ~u~~~~ customers In 21009 (2*5x original TNow planning)
Scenario 2: 400C customen in 21009 (Sx original TNow planning)
15:1 customers perPrtnarySUpport Engineer, 7 PSI! per100
7,5:1 cl!Sto!Ml'$ pw O.velopment Support Engln••r, 13 DSE per 100

PeopleSoft Enterpriu Ona and Wolfd (30 FTE per 100 customers)
10:1 cuSWnels perPSE(m 2.005QP06), 10PSE per 100

5:1 customen;..,.- DSe (in~ 20 DU per 100
Assuming PeopteSoft E:ntet'prl$e plilnntng ratios for Z009

•

"""AO~liiiiGJ,.I.-Ahn f ~- J Jill

,..u: aur-•u• •u•••.t>:t.&• ...., ~·.,-

~
~

'*fTI!) STATRDSlWI:f CCIUIT

-...-~-~
c - t:IJ- . . ..........

.a....

I PX0161 I
-29-

"TomorrowNow Integration Meeting"
- January 25-26, 2005 (Factor G))

Introduction
On behalf of Gerd Oswald, member of SAP's executive board
responsible for Service & Support, welcome to the SAP

&lpMGTMf18

Merger presents a huge opportunity for us
'

1

a Lll&a uuautch of
our Safe Passage offering which surprised the analysts and
especially ORACLE

11

a ue:u:e w: cmaaas aacwu:a:u caucu: c:ae uupa

• TNow will serve as major comerstone of our Go-to-market
strategy as our key Service-delivery unit
Let'$ do it Together Now HI
w.tu8TATHDIITUTCOURT

---- ...
=-b,--===-=,c

_.,HPNDIITIUCT~ ~<*U.

c..••~JH

•

~I'AO:mlii,Ttiellfr"IHIIU,Ch f ~ -- H

"""UttiiMTfiiO.Nt

,.

...................,

Mt.IIIIIAP

~
~

IPX0161j
-30-

PeopleSoft License - SAP's Expected Financial Gains
(Factor®)
·
1

Agassi Apotheker
"A Road map For PSFT Customers to SAP" -~
'
'
1 2;
(PXOa 12)
Kagermann~ Oswald,
1 2312004
Homhsh

2

"Safe Passage: Winning Customers and
Markets from Oracle-PeopleSoft-J.D.
1
Edwards - Executive Overview" - 1/16/2005
(PX0141)

3

1

4

"Safe Passage: Winning Customers and
I Markets from Oracle-PeopleSoft-JD
Edwards"- 1/20/2005 (PX0024, PX0151)

5

"TomorrowNow Integration Meeting" -1/251
26/2005 (PX0161)

6

1

SAP AG Phone Conference - 1/19/2005
(PX0023)

Deposition Testimony of Shai Agassi,
Former SAP Executive Board Member

Apotheker, Agassi,
Oswald, Homlish,
Ziemen, Mackey and
Others
Public

SAP Executive Board
Oswald, Ziemen,
Nelson, Ravin and
Others
N/A

• 3,000 maintenance customers by 2007
• Convert 1,375 customers to SAP by 2007
• $897 million in first 3 years
• "Our goal is to convert the majority of the
PeopleSoft and J.D Edwards customer base
to SAP"
• "Aggressively convert" 450 of Global1 000
"over the next 30 days"
• Target 4,000 joint SAP customers
• Two common customer scenarios

• Convert 50% of PSFT/JDE customers
(100% of shared customers) to SAP
• 9,920 X 50%= 4,690

I•2,000 to 4,000 TomorrowNow customers by
2009

1· 60% of PSFT/JDE customers
• 9,920 X 60% = 5,952
-31-

PeopleSoft License- SAP's Expected Financial Gains
-Calculation Inputs- Revenue Components (Factor®)

! 0
------; o

-

I0

UpSwitch
Closs

se•

r----

llairanance ' - -- - -·

-- ----------'-.o--' ___ , - ---~

._

-

--

r

- - _ _ _ _ _......
;

------------

": 0

200&
d .....,....,...,

..

~·

~r-11.1

J •£"· ;,;

2005

:,!'

*.ii.J;'Yf!
-

'r-

2007
alliT•aUM 8UIINI II I •

.u ..

I

P'!J'T.9'
S AP

~

Source: PX0012

]

-32-

PeopleSoft License - SAP's Expected Financial Gains
- Calculation Inputs (Factor

0)

SAP Projections 12/04-1/05
(PX0012, PX0023, PX0024, PX0161 ,
PX0141)

3,000

Conversions: 1,375 - 2,000
Other Sales: 2,250 • 3,000

Minus: Customer Attrition .,

Expected Attrition for PSFT

3.5% (per year)

3.5% (per year)

Multiplied By: Average
Revenue per Customer

"SAP Business Opportunity"

Number of Customers

=Total Revenue
Multiplied By: Profit
Margin
Multiplied By: Discount
Factor
= Expected Profits
(as of 1/05)
Plus: Future Value of
Customers

I

Calculated

Calculated

SAP Financial Records

70%

(PX1760, PX1761)

SAP Valuation Documents
(PX0533)

I

I

70%

14%

I

14%

Calculated

PeopleSoft Acquisition
(PX0013, PX1762)

Conversions: up to $358K
Other Sales: up to $86K

$68,000 (per year)

(PX0012)

Calculated

N/A

= SAP EXPECTED FINANCIAL GAINS

Revenue Multiple: 4
Per Customer Value: $1M

-34-

PeopleSoft License - SAP's Ex~ected Financial Gains
- Example Calculation (Factor

0)

3,000 Maintenance Customers I 2,000 Converted to SAP
2005.2008
Customer
Base

Expected SAP Maintenance Revenue

3,000

Expected Additional Product Sales
Expected License Revenue I Converted Customers

Total
Expected
Revenue

$

Less:
Costs

Total
Expected
Profits

Future
Financial
Gains from
Converted
Customers

N/A

Total
Expected
Gains as
January

2005

$

259.1

370.1 $ (111.0) $

259.1

3,000

187.9

(56.3)

131.6

90.6

222.

2,000

427.9

(128.3)

299.6

440.4

740.

690.3

$ 531.0

$1,221.3

$ 985.9 $ (295.6)

$

I sources: PX0012, PX013, PX-0193,-rxos33~PX1760, -PX1762 I
-35-

PeopleSoft License - SAP's Expected Financial Gains
-Calculation Results (Factor®)
Calculation A

Calculation B

TomorrowNow Maintenance
Customers
Other SAP Product
Customers
Converted Customers

SAP's Expected Gains
(as of January 2005)

* Future value based on revenue multiple
** Future value based on value per customer

I sources:Pxo612.Pxo13, PX0193, Pxosi3~-Px1760,PX1?62 I

-36-

PeopleSoft License - Oracle Negotiation Factors
Negotiation Factor

1:\ Oracle's Goals for

0
0
1

Risk to Oracle's
Investment in PeopleSoft

Maintenance revenue stream from 9,920
customers

~

~ PeopleSoft Acquisition

~

Doubles Oracle ERP worldwide market share

-/ $11.1 B investment including software and support
materials
-/ Loss of exclusive rights to copyrighted works

Oracle's Expected
Financiallmpacts

-/ At least 3,000 expected maintenance customer
losses
~

ORACLe·

Oracle expected financial impact

tiA, ;)"
-38-

PeopleSoft Acquisition - Summary (Factor®)
January 18, 2005

--

January 19, 2005
ORACLE
v" Non-Exclusive Rights to

v" Exclusive Rights to PSFT

Software and Materials
v" - 10,000 Customers

PSFT Software and Materials
v" Expected Loss of Customers,

Market Share and Revenue

v" 11% Increase in ERP Market

Share
v" $1.38 Annual Maint. Revenue

v" Non-Exclusive Rights to

PSFT Software and Materials
v" Expected Gain of Customers,

Market Share and Revenue

-4 2-

PeopleSoft License - Oracle's Expected Financial Impact
- Calculation Inputs (Factor®)
SAP Projections 12/04 - 1/05

3,000 (10/08)
1,375-3,000 (post-10/08)

Number of Lost Customers

(PX0012, PX0023, PX0024, PX0161 ,
PX0141)

Minus: Customer Attrition

Expected Attrition for PSFT

3.5% (per year)

Multiplied By: Average Revenue per
Customer

Oracle Valuation Documents

$130,000 (per year)

=Total Revenue
Multiplied By: Profit Margin
Multiplied By: Discount Factor
=Expected Profits (as of 1/05)
Plus: Future Value of Customers

(PX0615)

Calculated

Calculated

Oracle Financial Records

80%

(PX0013, PX1758)

Oracle Valuation Documents
(PX0013)

10%

Calculated

Calculated

Oracle Valuation Documents

8.3% Capitalization Rate

(PX0658)
= ORACLE EXPECTED FINANCIAL IMPACTS

-44-

PeopleSoft License - Oracle's E~ected Financial Impact
-Example Calculation (Factor~)
3,000 Maintenance Customers /1,375 (Post 10/08)
2005- 2014
Oracle Financial Impacts as of January 2005
(in $ millions)

Impacted Oracle Maintenance (1/05 -10/ 08)
(Impacted 1,375 Customers 10/08 -12/14)

[

Customer
Base

3,000 I
1,375

Total
Impacted
Revenue

Less:
Costs

$ 1,082.9 $ (216.6)

Total
Impacted
Profits

$ 866.3

Future
Financial
Impact of
Converted
Customers

$ 519.9

Total
Expected
Impact as o
January
2005

$ 1, 386.~

Sources:-PX0012, PX0013, PX0615, PX0658, PX1758 . -j
-45-

PeopleSoft License - Oracle's Expected Financial Impact
- Calculation Results - (Factor®)

Calculation A

Calculation B

$1.36 Billion

$1.82 Billion

PSFT/JDE Maintenance
Customers Lost to
TomorrowNow

Oracle's Expected Impact
(as of January 2005)

$2.46 Billion

[ s;~~~-es: Pxoo1£-P)<0013, PX0615, PX06Sa,-PX1758 ]
-46-

Siebel License - Key SAP Documents

"Siebel Safe Passage Program
1 I Playbook" - October 2005
(PX0960)

2 1

"Business Case: TomorrowNow
2006" - 10/17/2005 (PX0958)

Email: "TN Standalone deals to
3 I Safe Passage" - 3/26/2006
(PX0037)

0 0 0

• "The opportunity is to move the 300+ SAP customers
SAP and Siebel have in common and migrate them to
mySAP CRM."
• "Program Objectives & KPI's: Keep Oracle out of our
customer base. Provide an incentive to Siebel customers
who have a SAP footprint to migrate from Siebel CRM to
mySAP CRM."

0 0

• "The Siebel customer base consists of 4,000 customers,
(including large number of join SAP/Siebel customers)
and presents a huge market opportunity."
• "The maintenance offering - a key part of the Safe
Passage Program and provided by TomorrowNow- can
be used as enabler for future license revenue"
• "Biz Planning - TNow Offering for Siebel": 200
customers (cumulated) in 2008

0

• "Over the long term, every $1 of TN Stand-alone revenue
this year represents $18 of originally expected Oracle
revenue"
-54-

"Siebel Safe Passage ProJI!.am Playbook"
October 2005 (Factors ~· &

0)

Cllaplltr 1.0: Summary& Slralegy
Siebel Sale P;osgge

- ----·-·-11111---. . .--

Siebel Safe Passage
Program Playbook

-·-·--·--···:::=::..-llll.-n
:=:====-·-====- -·
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SAP

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---~~~aw--. - · - - · - - _ _ _ _ _ a-..

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PUIRfa.lfla~'C'~

5:,..~:::;:;:;_;:;:;:::::_

[~ PX0960 . I

-55-

"Business Case: TomorrowNow 2006"
-October 17, 2005 (Factors CD &0)
Biz Opportunity - TNow Offering for Siebel

..
-

Tire SE!DEt I:WSDll!S" ta5e CDIIil&t& a'
On:tlllltl~
...............
lifgJ!! Dlllrtt!rt31' jlll.nt Sfi.P.!Sii!teil Ct.JfitOrl'"leiS) .and pesentli.a t'Jit§IE!
__.....,_...._......,. I1."'JiJJSl lliJ:paltlll It¥
-------~

---

•

_..........
.......... _

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-

._

~

!)

....

~

_.....

~r~r...._IW'CA""'TION

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-by""""""'

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DIRi.'lg8Gonner. . . lhe~otiTICMlgotrot
liiAI'IfJ'IIUI1D .... I'll!lla-J801'6

_.....,_""""'-_.__~--..........---

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UlOII1dlng 1111! Sli!belo'Oracll

&WII.•It ...... -501111>purol\alil!
fRII'PKII.ve~

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........--....... . ...........
--.... ....................... ................
-~

zqJIIIICIIIII not l!llpeCieCIIa -~~~~~~ Y1y ZX16

~ ..ll.l!lfSpiJIIII Ill ~S14JP0Rwlh

llr.lftllllll5n:ll p.1Wicledlmd rrop6 . . ~an<!
!rtw:l:l!r"nfr.l plill5

~

........,_......,.. _,

---._ca.

•lilll!-

I

~_

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~

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I PX0958 I

-56-

Siebel License - SAP Expected Financial Gains
-Example Calculation (Factor(!))
200 Maintenance Customers I 200 Converted
2006-2008
Customer
Base

Total
Expected
Revenue

$

N/A

Total
Expected
Gains as
September

2006

$

11.

17.0

$ (5.1 )

130

8.3

(2.5)

5.8

4.4

10.

200

41.4

(12.4)

29.0

45.6

74.

$ 66.7

$ (20.0)

$ 46.7

$ 50.0

Expected SAP Maintenance Revenue

200

Expected Additional Product Sales
Expected License Revenue I Converted Customers

c--

$

Less:
Costs

Total
Expected
Profits

Future
Financial
Gains of
Converted
Customers

11 .9

USources: PX0012, PX0193, PX0533, PX0615,-Px1760,PX1762

$96.7

I
-60-

Siebel License - SAP's Expected Financial Gains
-Calculation Results (Factor®)
TomorrowNow
Maintenance Customers
Other SAP Product
Customers
Converted Customers

,
SAP's Expected Gains
(as of September 2006}

$97 Million*

~
$247 Million**

* Future value based on revenue multiple
** Future value based on value per customer

]

Sou~es:PX0012,PX0193,PX0533,PX0958,PX1762,PX1760

]
-61-

Siebel License- Oracle's Expected Financial Impact
- Example Calculation (Factor G))
200 Maintenance Customers I 200 (Post -1 0/08)
2006-2015
Oracle Financial Impacts as of September 2006
(in $millions}

Impacted Oracle Maintenance (9/06 - 12/15)

Customer
Base

200

I Sources: PX0012, PX614,

Total
Impacted
Revenue

$ 109.4

Less:
Costs

$(16.4)

Total
Impacted
Profits

$ 93.0

Future
Financial
Impact of
Converted
Customers

$ 71.0

Total
Expected
Impact as
of Sept.
2006

$ 164.(

PX061~PX065B,PX0958PX1758]
-66-