|Bid||122.78 x 76700|
|Ask||122.78 x 56500|
|Day's Range||120.96 - 122.78|
|52 Week Range||83.95 - 125.00|
|Beta (3Y Monthly)||1.07|
|PE Ratio (TTM)||43.11|
|Forward Dividend & Yield||1.50 (1.23%)|
|1y Target Est||N/A|
German data mining software firm Celonis said on Thursday that it had raised $290 mln in a Series C funding round, putting a $2.5 billion (£1.9 billion) valuation on the company that has been compared with enterprise application giant SAP . The funding round was led by Arena Holdings and investors included Ryan Smith, the founder of customer experience specialist Qualtrics that was bought by SAP for $8 billion a year ago. "We are in a market that shows enormous momentum," co-CEO and co-founder Bastian Nominacher told Reuters, adding that Celonis would invest the funds raised in its global sales and customer service and in enhancing its cloud platform.
(Bloomberg) -- German Chancellor Angela Merkel’s government is about to unveil plans for a cloud service to allow European companies to avoid storing data with U.S. or Asian rivals such as Amazon.com Inc. or Alibaba Group Holding Ltd.Economy Minister Peter Altmaier will reveal the service -- named Gaia-X after a Greek goddess symbolizing Earth -- at a tech conference Tuesday in Dortmund, Germany. He has worked on the project with officials from companies including SAP SE, Deutsche Telekom AG and Deutsche Bank AG, according to a strategy paper by the Economy Ministry obtained by Bloomberg News."Data are the resource of the future," according to the paper. "That’s why Germany and Europe needs data infrastructure that ensures data sovereignty and enables the sharing of data on a broader and secure basis."Geopolitical tensions and trade wars are making European politicians cautious about domestic champions ceding control of their data to the likes of Amazon, Google or China’s Alibaba, fearing European companies could lose control of data about customers or production.Under the Trump Administration’s Cloud Act signed last year, U.S. storage providers can be ordered to provide local authorities information held on their servers no matter where that data is physically located. A similar concept has been enshrined in Chinese law since 2017, in which information of citizens must be stored in-country and accessible on demand to the authorities.Gaia-X is meant to serve as a link between several different cloud services by providing a joint standard to share data. That way, a European mobility startup could make use of information provided by transport authorities, for example.Read More: European Companies Look to Build Their Own Walls in the CloudGermany plans to create a company-type organization for the cloud service in the first half of next year, according to the paper. Altmaier has in the past said the service is meant to become a European platform, but it’s unclear whether more governments in the region have agreed to participate in the project.Agnes Pannier-Runacher, France’s deputy economy minister, told Bloomberg in July that businesses relinquishing control of their data was “a systemic risk” to the competitiveness and sovereignty of an economy. Germany’s central bank has also warned the region’s banking sector that the move to shifting data on the cloud will make the industry harder to monitor.To contact the reporters on this story: Birgit Jennen in Berlin at firstname.lastname@example.org;Stefan Nicola in Berlin at email@example.comTo contact the editors responsible for this story: Rebecca Penty at firstname.lastname@example.org, Giles Turner, Nate LanxonFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- ServiceNow Inc. incoming Chief Executive Officer Bill McDermott promised to transform the growing software maker into a “global juggernaut” as he works to convince investors he’s the right man for the job.“I wanted at this stage in my career a company that was in the early stage of its growth pattern and help them go to the next phase, to truly become one of the most admired software brands in the world,” McDermott, who stepped down earlier this month as CEO of German software giant SAP SE, said Wednesday in an interview. “The company is on a roll. I’m going to fortify that and continue that. The experience of what I know and I’ve seen will be incredibly helpful to ServiceNow. This company will be a global juggernaut.”ServiceNow has long promised to organize tedious parts of office life, like setting up a help desk for IT operations and bringing on board new employees. The company has expanded into new markets, such as human resources, to maintain an annual sales growth rate of at least 35%, which it has achieved since going public in 2012. McDermott’s appointment Tuesday concerned some investors and analysts who highlighted that he hasn’t led “growth companies,” having worked at Xerox and spent about a decade as the first American CEO of Walldorf, Germany-based SAP.McDermott dismissed the criticism, saying ServiceNow is glad to have a “street fighter” like him in its corner.“If someone says Bill McDermott is best known for running large, global, powerhouse companies and they say ‘Is he the right person to lead ServiceNow because it’s not as large,’ I would say, I was completely unaware of ServiceNow’s intention to stay small,” he said. “I’m a leader. I lead organizations and establish visions. At the same time, I’m conforming to ServiceNow’s culture. I think that’s why I am the perfect person.”McDermott added that continuity is important and he sees himself as similar to John Donahoe, ServiceNow’s current CEO, who is stepping down in January to run Nike Inc. McDermott also said he wants all of ServiceNow’s current executives to remain in place when he takes the top job.McDermott said he has interviewed a pool of candidates in the search for ServiceNow’s next chief financial officer and was looking for a candidate who could fit the company’s culture and boost its operating margins and profit. “I think we have found such a person,” he said. The software maker may announce a pick before Thanksgiving in late November, he said.The Santa Clara, California-based company projected subscription revenue that topped Wall Street estimates Wednesday. Sales from subscriptions will be $897 million to $902 million in the current period, ServiceNow said in a statement. Analysts on average expected subscription revenue of $897.7 million, according to data compiled by Bloomberg. That would represent 35% growth compared with a year earlier.The company also reported adjusted profit of 99 cents per share in the period that ended Sept. 30, above analyst estimates of 89 cents.The stock climbed about 4% in extended trading after closing at $220.01 in New York Wednesday. The shares have gained 24% this year.McDermott said that he would stick to ServiceNow’s goal of reaching $10 billion in annual revenue by an unspecified time.“Very simply, I completely buy in, stand behind it, and I’m looking forward to achieving it,” McDermott said on a conference call with analysts.While McDermott is known for his penchant for large acquisitions, such as SAP’s almost $8 billion purchase of Qualtrics International Inc., he said in an interview ServiceNow still had a lot of room for organic growth, which is his preference.“There is no need at this time for large scale M&A maneuvers,” he said.(Updates with comments from earnings call in the 11th paragraph.)To contact the reporter on this story: Nico Grant in San Francisco at email@example.comTo contact the editors responsible for this story: Jillian Ward at firstname.lastname@example.org, Andrew PollackFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- ServiceNow Inc., a cloud-based corporate software provider, appointed former SAP SE Chief Executive Officer Bill McDermott as its new CEO, succeeding John Donahoe, who is departing to run Nike Inc.McDermott, 58, surprised the software industry earlier this month when he stepped down from Walldorf, Germany-based SAP. He joined Europe’s largest software maker in 2002 and was the first American to hold the CEO position at the company. As CEO for a decade, McDermott embraced cloud computing, changing the way SAP sold software so customers could use it over the internet.In ServiceNow, McDermott will lead a much smaller company than SAP, but one that is growing rapidly. The Santa Clara, California-based company makes software that businesses use to automate workflows such as creating a help desk for employees, managing internal projects, bringing on board new workers and providing customer service. The company’s large deals with big corporate clients have fueled sales, which grew 36% in fiscal 2018 to $2.61 billion.“Investors wonder if ServiceNow is such a great opportunity why would John Donahoe leave, even if it is to take over one of the most iconic consumer brands in Nike,” Sterling Auty, an analyst at JPMorgan Chase & Co., wrote Tuesday in a note. “Also, our conversations with investors makes us believe that Bill McDermott will receive a lukewarm reception as the incoming CEO.”Separately, ServiceNow reported preliminary earnings results, which had been scheduled to be released Wednesday. Subscription revenue grew 35% in the third quarter to $835 million, the company said in a statement. For the full fiscal year, the company expects subscription revenue of $3.24 billion to $3.25 billion. ServiceNow expects subscription billings to grow 32% to 33% this fiscal year compared with a year earlier.ServiceNow’s stock fell more than 9% in extended trading on the news. The shares had climbed 28% this year to $228.34 at the close in New York Tuesday.Donahoe, 59, who joined ServiceNow in April 2017, will remain CEO through the end of the year before starting his Nike tenure in January, the company said. The former EBay Inc. chief executive officer will maintain his seat on ServiceNow’s board through his term, which ends in June.(Updates with analyst comment in fourth paragraph.)To contact the reporters on this story: Tom Giles in San Francisco at email@example.com;Nico Grant in San Francisco at firstname.lastname@example.orgTo contact the editors responsible for this story: Jillian Ward at email@example.com, Andrew Pollack, Alistair BarrFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg Opinion) -- India’s best-known software exporter is facing an impossible trinity of sorts: Out of sales, margins and governance, Infosys Ltd. can hit only two goals at a time.Or so it would appear from yet-to-be-proven whistle-blower allegations against Chief Executive Officer Salil Parekh and Chief Financial Officer Nilanjan Roy that they used hyper-aggressive accounting practices to hide from investors the lack of profitability on large deals. The stock tanked as much as 16% in Mumbai after the letter was published by the Deccan Herald. It’s a deja vu moment for co-founder and non-executive Chairman Nandan Nilekani, who returned to the Bangalore-based company two years ago during a previous crisis — sparked by a set of different anonymous charges against Parekh’s predecessor, the former SAP executive Vishal Sikka, who was accused of impropriety in a $200 million acquisition in Israel.That scandal culminated in an unseemly spat between Sikka and the board on one side and N.R. Narayana Murthy, another of the company’s co-founders, on the other. Sikka resigned in August 2017. The new board exonerated him, but by then the damage was done.It’s been a slow road to recovery. At a one-year-forward price-to-earnings multiple of 20 times at the end of September, Infosys’s valuation is now almost 50% higher than at the depth of the last crisis. The risk is of a repeat of that slump.If investors start to believe that the culture at the software services provider, once seen as India’s most transparent company, is beyond redemption, expect a durable deepening of the 10% discount at which Infosys traded against larger rival Tata Consultancy Services Ltd., or TCS, at the end of last month. Since the company’s American depository receipts trade in New York, there’s also the threat of expensive class-action suits.The allegations are being evaluated by the audit committee and the board. The CEO and the CFO won’t be a part of those deliberations. Whatever the truth of the whistle-blower’s complaints, another protracted governance saga could be just as damaging.It might not be a bad idea for a buyout fund to step in and take Infosys out of the glare of the public markets. As a private company, it could rediscover its moorings and find a new purpose in a digital world where clients increasingly want nimble, cloud-based, on-demand software, rather than clunky, on-premise enterprise solutions.At $12 billion in the fiscal year that ended in March, Infosys revenue is nowhere close to Sikka's 2020 target of $20 billion. An operating margin of less than 23% was lower than the near 26% at TCS, according to data compiled by Bloomberg.After a period of rehabilitation, Infosys should be able to deliver all three targets: sales growth, margins and good governance. Some private time could be just what it needs to get fixed.To contact the author of this story: Andy Mukherjee at firstname.lastname@example.orgTo contact the editor responsible for this story: Matthew Brooker at email@example.comThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Andy Mukherjee is a Bloomberg Opinion columnist covering industrial companies and financial services. He previously was a columnist for Reuters Breakingviews. He has also worked for the Straits Times, ET NOW and Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
Business software group SAP said on Monday it had reached a three-year deal with Microsoft to help its large enterprise customers move their business processes into the cloud. The partnership, called "Embrace", will help clients to run operations hosted at remote servers supported by SAP's flagship S/4HANA database, new Co-Chief Executive Jennifer Morgan said as SAP released third-quarter results in line with preliminary figures released on Oct. 11. "We bundled SAP's cloud platform services to support customers around the extension, integration and orchestration of SAP systems," Morgan told reporters, adding that Microsoft would act as a reseller for the product.
European shares broke a three-day run of losses on Monday, as investors stuck to hopes that Britain will avoid a disorderly exit from the European Union, while positive corporate updates and comments on U.S.-China trade talks added to the upbeat mood. The pan-European STOXX 600 index ended the session 0.6% higher, barely budging on news House of Commons speaker John Bercow refused to allow a vote on Prime Minister Boris Johnson's Brexit divorce deal, saying the same issue had been discussed on Saturday.
(Bloomberg Opinion) -- With ambitious profitability goals, a business in flux and an activist investor hammering at the door, SAP SE Chief Executive Officer Bill McDermott’s time was up. His successors’ skill sets look better suited to meeting those challenges.After nine years at the helm of Europe’s largest technology company – five as sole CEO, four as co-chief – the American manager stepped down on Thursday, replaced by two new co-CEOs: Chief Operating Officer Christian Klein and cloud chief Jennifer Morgan.McDermott’s tenure was largely impressive. Through $31 billion of deals, SAP entered a string of new businesses, and generated good value for shareholders. Annual returns averaged 15% under his leadership, compared to the 12% average of European technology firms. Since he took sole control in 2014, the returns have been even higher, and the market capitalization has doubled to almost 140 billion euros ($155 billion).Even with that growth, however, many still see the stock as undervalued: SAP trades at 21 times expected earnings, while new cloud software players such as ServiceNow Inc. trade at a multiple of 65 times. That’s partly because of some of McDermott’s operational shortcomings, not least a failure to integrate many of the acquisitions effectively and to get customers to buy into SAP’s cloud products fast enough. SAP’s clients feel they’re at a disadvantage in their digital transformation efforts to competitors who use products from SAP’s rivals, according to an industry body called the DSAG that represents SAP users in the German-speaking world. One major complaint is a failure of SAP to get its new offerings in the same coding language, creating additional work for their clients to get it all working together. As a result, only third of its 3,500 members trust the Walldorf, Germany-based company to accompany them well on the journey, the group told the Frankfurter Allgemeine Zeitung newspaper in September.The road ahead looks rocky. In April Elliott Management Corp., the activist fund controlled by the billionaire Paul Singer, revealed it had built a 1% stake in the maker of enterprise software and demanded a halt to any new dealmaking. It’s targeting an increase in earnings per share that will likely require a buyback of as much as 10% of the stock. SAP simultaneously announced it intends to improve profitability by 5 percentage points through 2023, with a focus on a better gross margin at the cloud business.The new CEOs therefore seem the logical picks. Klein is probably expected to bring the improved focus on operations needed to deliver the profit goal, and Morgan the cloud experience needed to accelerate the so far torpid adoption of its products in that market. Having been later than some U.S. competitors to pivot toward a cloud-based business, SAP is now migrating its customers away from software run on their own premises, and into its cloud offerings. Oracle Corp. sees the shift as an opportunity to steal customers from its German rival.The push has come at the expense of SAP’s profitability, which lags the level of peers such as Oracle. McDermott already announced a major restructuring program that includes 4,000 job cuts. Another set of measures will be unveiled at an investor day in New York next month. The timing of the management change therefore gives shareholders a prime opportunity to meet the new team. They will need reassurance that Klein in particular, who at 39 will be the youngest chief executive officer in Germany’s benchmark DAX Index, can seamlessly manage the operational challenges such change inevitably poses. Cost-saving pushes can generate significant uncertainty.McDermott’s departure does perhaps dispel any lingering doubt about who is really in charge at SAP: co-founder and Chairman Hasso Plattner. The 75-year-old looms large in the corridors of SAP’s headquarters in Walldorf. Thursday’s leadership picks mark the culmination of a wave of board changes which also saw former cloud chief Robert Enslin and digital services head Bernd Leukert depart in the past year. When, a few years ago, the company started developing its “digital boardroom,” a web portal that lets managers dig into the finest details of the company’s operations and evaluate earnings in real time, it was because Plattner asked for it, not McDermott.As successful as McDermott was, his shortcomings also made the company more vulnerable to an activist approach. If Elliott were to push for SAP to be carved up, that would endanger Plattner’s legacy. Morgan and Klein now have to knuckle down on delivering that profitability goal. Their boss’s place in the history books is at stake.To contact the author of this story: Alex Webb at firstname.lastname@example.orgTo contact the editor responsible for this story: Melissa Pozsgay at email@example.comThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Alex Webb is a Bloomberg Opinion columnist covering Europe's technology, media and communications industries. He previously covered Apple and other technology companies for Bloomberg News in San Francisco.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
(Bloomberg) -- SAP SE is sticking to its new plan of keeping the company youthful, and top management isn’t being spared.The storied German software giant, Europe’s biggest tech company by market value, has spent the past few years attempting to reinvent itself. It’s working to adapt its corporate software, used by almost all of the world’s 100 most valuable brands, to the web and is taking on younger rivals in cloud-based computing.There’s also been an exodus of company veterans, which as of 12:44 a.m. Friday in Walldorf, included CEO Bill McDermott.Analysts have called the late-night news a surprise; McDermott’s contract doesn’t run out until 2021. He also unveiled a major restructuring plan in April and was expected to brief investors on the company’s strategy next month.But, as he said on a conference call after the announcement, “Ten years is a long time to be CEO.”McDermott, 58, had been with the company since 2002 when he joined as head of its North American business. At the time, he was that unit’s fourth head in three years as SAP struggled to compete with rivals like Oracle Corp., and grappled with a drop in sales of software licenses. Problems with its products were blamed for delayed shipments of Whirlpool Corp.’s appliances and even Hershey’s Halloween chocolates.In the role, he recruited a new management team, changed the way the sales department targeted customers, and ultimately boosted sales growth. When CEO Leo Apotheker unexpectedly resigned in 2010, McDermott and product-development head Jim Snabe were picked to replace him as co-CEOs. Snabe -- currently chairman of Siemens AG -- stepped down and took a spot on the board in 2014, and McDermott became sole head of the company.With nearly 100,000 employees and a sprawling business that generated about $27 billion in revenue last year, driving change has sometimes been controversial. Since 2011, McDermott spent $26 billion on six major cloud acquisitions, and was the main advocate for the $8 billion acquisition of Qualtrics International Inc., the company’s largest-ever deal.Analysts criticized the purchase as too expensive. In November, Qualtrics said it expected revenue for 2018 to exceed $400 million, a figure that wouldn’t move the needle much for SAP. McDermott defended the deal, believing that combining SAP’s sales force and a trove of operational data with Qualtrics’s customer experience feedback would accelerate growth.More recently, the company attracted the interest of activists at Elliott Management Corp., which revealed its 1.2 billion-euro ($1.3 billion) stake when SAP announced a change in strategy in April. SAP had been vague at the time, saying it planned “new initiatives to accelerate operational excellence and value creation” with a focus on “tuck-in” acquisitions.SAP underwent a management shakeup in the weeks preceding the April announcement. The president of its cloud business, 27-year SAP veteran Robert Enslin, had announced his departure earlier that month. It was later revealed he’d left for Google. A day earlier, Chief Technology Officer Bjoern Goerke, another cloud expert based in the U.S., penned a blog post saying he was leaving the company he joined as a student in 1988. Board member Bernd Leukert, a seasoned IT executive, left SAP in February.Personally, McDermott also had to weather a near-fatal accident in 2015 that cost him an eye when he fell down some stairs while carrying a water glass and nearly bled to death.His replacements are a mix of old and new guard at SAP. Christian Klein, 39, spent the past 20 years at SAP, after joining as a student in 1999. Jennifer Morgan, 48, arrived in 2004 and was the first American woman on the company’s executive board. Morgan has been seen as McDermott’s protege, rising relatively quickly through the ranks, and most recently served as the president of the all-important cloud group.Together, Klein and Morgan will have to find a way to compete with younger companies like Salesforce.com Inc. and Workday Inc. while encumbered by a traditional enterprise software business.Cloud is the company’s clear growth engine, with revenue increasing about 32% last year to about 5 billion euros. Sales from its largest business, which helps clients set up and implement SAP’s software, grew less than 1% in 2019.McDermott’s resignation was announced alongside better-than-expected preliminary third-quarter earnings results. New bookings for the company’s cloud products, a key metric that indicates future sales, grew 33% on a constant-currency business. That was more than double the pace set in the second quarter, when disappointed investors sent shares down as much as 10%.“While it is a shock to see Mr. McDermott stepping down, he is clearly handing over the reins of the business from a position of strength and we are encouraged to see that his replacements are long-term members of the SAP executive team,” said Thomas Fitzgerald, fund manager at SAP shareholder Edentree Investment Management, in a note on Friday.\--With assistance from Stefan Nicola.To contact the reporters on this story: Amy Thomson in London at firstname.lastname@example.org;Kit Rees in London at email@example.comTo contact the editors responsible for this story: Giles Turner at firstname.lastname@example.org, Nate LanxonFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
European shares were boosted on Friday by advancing shares of SAP after its long term CEO stepped down, while upbeat rhetoric surrounding U.S.-China trade talks and Brexit also brightened the mood. The pan-European STOXX 600 climbed 0.5% at 0705 GMT, with shares in Frankfurt rising 0.8% - the most among its peers. SAP shares pushed the technology sector 2.5% higher, touching a two-month peak.
(Bloomberg) -- SAP SE named executives Jennifer Morgan and Christian Klein as the successors to Chief Executive Officer Bill McDermott, who’s stepping down after leading Europe’s largest software company during a decade of major industry changes.The two SAP veterans will become co-CEOs effective immediately, the company said Thursday in a statement. McDermott, 58, will remain at the company in an advisory role through the end of the year.Shares of SAP rose as much as 8.4% in Frankfurt on Friday, the most since April, and are up 31% for the year.Morgan, 48, who joined SAP in 2004, most recently served as president of the software giant’s cloud business group. She became the first American woman appointed to SAP’s executive board in 2017 when she was named president of the Americas and Asia. Klein, 39, joined SAP as a student in 1999 and has been chief operating officer since April 2016, and on the executive board since 2018.McDermott’s departure was unexpected, but the new co-CEOs were on investors’ “short-list” to take over in future, Citigroup analysts including Walter Pritchard said in a note.“The decision was made based on my determination that 10 years is a long time to be CEO,” McDermott said on a conference call after the announcement. “You get to the point when you have done what you set out to do and then some.”McDermott joined Walldorf, Germany-based SAP in 2002 and was the first American to hold the CEO position at the firm. He embraced cloud computing, changing the way SAP sold software so customers could use it over the internet. He’s been transitioning the company through acquisitions and revamped products, challenging rivals Salesforce.com Inc. and Oracle Corp.While SAP had pledged to triple cloud revenue by 2023, the effort has shown mixed results and the company has pushed to shore up profit margins with the support of activist investor Elliott Management.Earlier, SAP reported preliminary third-quarter revenue and profit that topped analysts’ estimates. Cloud bookings, a key metric in the company’s transition, increased 33% on a constant currency basis, more than double the pace of the second quarter, the company said.SAP’s 3Q results “will likely be received positively and we’d expect will drive a relief in shares,” Citi said in its note.McDermott cited the strong results as a reason for the timing of the leadership change, saying he wanted to give his successors the reins while the company is at “maximum strength.”Morgan said she was only three hours into her tenure so didn’t know what changes she might push for, but expressed optimism in the leadership structure.“I’m a very big believer that when two people come together, you can really get a lot done,” she said on the conference call.McDermott said he was uncertain about his future plans.“I will do something at some point,” he said. “But today’s SAP’s day. There is no doubt in my mind the future of SAP is even brighter now.”(Updates with comments, context and shares throughout.)\--With assistance from Joe Easton.To contact the reporter on this story: Nico Grant in San Francisco at email@example.comTo contact the editors responsible for this story: Jillian Ward at firstname.lastname@example.org, Andrew PollackFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Bill McDermott stood down on Friday after a decade building up SAP as the world's leading enterprise software company, handing the task of completing its transition to cloud computing to new co-CEOs Jennifer Morgan and Christian Klein. The succession, which helped to send SAP's shares up 7% in early trading, ends an era in which McDermott struck a string of multi-billion-dollar deals that built SAP into Europe's leading technology group but also created complexity that frustrated many clients. McDermott's exit follows the entry this year of activist investor Elliott, amid broader market concern that his acquisitions - including last year's $8 billion deal to buy customer relationship platform Qualtrics - had caused SAP to lose focus.
(Bloomberg Opinion) -- To understand Elliott Management Corp.’s plans for AT&T Inc., it’s worth examining how it tackled a relative telecommunications minnow in Europe. The activist investor’s 2018 fight for control of Telecom Italia SpA may have provided something of a dry run.Last year, after revealing its stake in the Italian carrier, the fund run by combative billionaire Paul Singer started with a relatively short and straightforward list of proposals: improve governance, replace the board and divest some fixed and mobile network assets to reduce debt. Over the subsequent months, perhaps as it ascertained what resonated best with other shareholders, the strategy evolved into a more extensive array of requests dressed with a more constructive air.By the end of the year, Singer had realized the goals that were supposed to right the ship. Elliott had installed a new chief executive officer, Luigi Gubitosi, who won support on expectations he would be better able to execute a turnaround program. Conveniently, Gubitosi, an Italian with a private equity background, appears more open to putting a for-sale sign on assets that Elliott wants Telecom Italia to shed.With AT&T, Elliott started off the bat with a more exhaustive set of proposals akin to those it took months to develop at Telecom Italia: operational improvements, a portfolio review, better governance, a halt to acquisitions, and an exhortation for AT&T CEO Randall Stephenson to “align management skills,” which seems to hint at personnel changes. That could mean trying to prevent the ascent of John Stankey, AT&T’s chief operating officer and heir apparent for the top role.As AT&T investors and employees dig into the details, they should ignore the noise and focus on what are probably Elliott’s ultimate goals. That doesn’t mean it will be a smooth ride for either side. Telecom Italia stock is down almost 30% from the levels at which Elliott likely bought in, and selling assets will probably take a long time. The company’s biggest shareholder, French media conglomerate Vivendi SA, has fought Elliot at every turn. At AT&T, Elliott is pushing for what looks like a more constructive approach, but the fund’s core ambitions are surely the divestment of assets, including the shrinking DirectTV business and perhaps even parts of the phone network. QuicktakeWho Really Wins When Activist Investors Attack?U.S. carriers have so far largely avoided putting their fixed-network assets up for sale, but there’s plenty of appetite from funds such as KKR & Co. to invest in the infrastructure that supports the data economy. In Europe, similar assets have been sold for close to 20 times earnings before interest, taxes, depreciation and amortization.Elliot has also taken a page from its agenda with German business-software giant SAP SE, calling on AT&T to a halt any new acquisition plans to focus on better integrating purchases it already has in motion. That complements the Telecom Italia strategy by ruling out moves that may add to the debt pile when the goal is to reduce it.There are differences, of course. Telecom Italia was a proxy fight to secure board control. That’s not on the table at AT&T – at least, not yet. And building a meaningful enough stake in the $274 billion American firm for such a fight would be tough. But the trajectory seems the same. To contact the author of this story: Alex Webb at email@example.comTo contact the editor responsible for this story: Melissa Pozsgay at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Alex Webb is a Bloomberg Opinion columnist covering Europe's technology, media and communications industries. He previously covered Apple and other technology companies for Bloomberg News in San Francisco.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
SAP and Microsoft - two of the biggest names in enterprise computing - together in a 3-year deal ... To offer large business customers an easier move into the cloud. Disclosed on Monday, the new partnership is called 'Embrace'. It'll help clients run operations hosted at servers supported by SAP databases. And thus address a complaint from some clients that it's too hard to shift from in-house to remotely-hosted services. It wasn't the German firm's only announcement: it also confirmed its third-quarter results. Cloud margins, it says, are up over five per cent to 69% - closing in on a 75 per cent target by 2023. Earlier this month, SAP disclosed that new cloud bookings had more than doubled ... Thanks to this deal. Overall revenues for the firm are up 10 per cent. Nor is it SAP's only new partnership .... Monday's announcement came from Jennifer Morgan, who this month took over as co-chief executive with Christian Klein ... The two appointed as a joint leadership after Bill McDermott announced he was stepping down. The succession news boosted SAP shares by over 7 per cent on the day.
Oct.21 -- SAP SE Chief Financial Officer Luka Mucic talks about the management change, the company's strategy and outlook. Chief Executive Officer Bill McDermott will depart at the end of the year, while Jennifer Morgan and Christian Klein will become co-CEOs. Europe’s biggest software company reported preliminary third-quarter sales and profit that topped analysts’ estimates. Mucic speaks with Matt Miller on "Bloomberg Markets: European Open."