The latest Fortune Magazine has an article titled: Can this man save the grid?

According to the Edison Electric Institute, utilities over the next 20 years will spend hundreds of billions of dollars on infrastructure improvements, including computers, sensors, and networking systems….

One of the players best positioned to capitalize on the rollout of the smart grid is a Silicon Valley entrepreneur named Ray Bell. Bell, 52, a veteran of Oracle (ORCL - Annual Report), Cisco (CSCO), and a network services company he started called SmartPipes, has focused on what may be the most profitable component in the new system: the electric meter that sits in your basement and ticks off the watts as you consume them.

I have been an owner of the market leader in smart meters, Itron (ITRI), for some time. I found the article interesting because it uncovers a potential competitor I hadn’t previously worried about.

It costs roughly $300 apiece to replace them with one of Bell’s so-called smart meters. Southern California Edison will spend $1.7 billion over the next four years to equip 5.3 million homes with smart meters made largely by competitor Itron, based in Liberty Lake, Wash. Bell thinks he has made a better one.

That doesn’t bother me much. Of course Bell thinks his is better, otherwise he wouldn’t have bothered to make it. History is littered with products that are technologically better but fail in the marketplace. More worthy of concern, to me, is his sales force.

He has some important backers. His main partner is the biggest, most dependable name in the business: General Electric (GE - Annual Report).

GE gives instant credibility, clout and power to the product, as well as making it possibly less likely that GE would want to acquire Itron.

There’s probably enough room in the market for both players, but it is worth keeping an eye on the potential competitive effects.

Disclosure: At time of publication, William Trent owns shares of Itron (ITRI).

Business software maker MicroStrategy Inc. (MSTR) said Thursday its first-quarter profit declined, as increasing operating expenses overshadowed growth in product license revenue and support. Investors appeared to be surprised by the news, taking the shares down more than 16%.

They shouldn’t have been. I warned three months ago that MicroStrategy looked cheap for a reason:

A look at recent customer wins shows a concentration of retail, financial and healthcare markets. Not exactly the clients one wants during a consumer and financial crunch.

Indeed, it looks as though the toll was already being felt when MicroStrategy reported third-quarter results. Although gross accounts receivable were basically flat during the first nine months of 2007, the allowance for doubtful accounts was increased by nearly 50% to $2.8 million. This suggests that the company may be having trouble collecting from some customers.

Both net income and cash flow from operating activities declined during the first nine months of 2007. Though service and maintenance revenue grew, product licenses declined more than 3%. Since customers must license a product before they can service or maintain it, the falling product licenses suggest that profits may continue to fall, especially if customers indeed prefer the convenience of one-stop shopping offered by IBM, Oracle and SAP.

In fact, profits would have been lower still had MicroStrategy expensed all of its software development costs, as it did in early 2006. In the first nine months of 2007 $2.7 million of such costs were capitalized, and the capitalized software balance increased by $1 million. Had the development costs been expensed as incurred, cash from operations would have been $2.7 million (4%) lower and net income would have been $641,000 ($0.05 per share) lower.

The allowance for doubtful accounts continued to rise, despite continued declines in the gross receivables. And the capitalized software costs are coming back to bite, as the expenses are now being recognized and no additional costs were capitalized.

To be fair, though, the latest miss came following a run-up in the stock price. Today’s severe decline in the shares merely leaves me looking like a bit less of an idiot than I did yesterday. Since I wrote the article, MSTR shares are up 4.9%, compared to a 1.4% rise in the S&P 500.

Disclosure: At time of publication, William Trent holds no financial position in the companies mentioned in this article.

This article was published on RealMoney on February 1, just 4 hours before MicroStrategy surprised investors with a blown earnings report. Although I typically take a long-term view, you can never count on having the luxury to do so.

Looking at my screens this week, I noticed that MicroStrategy’s (MSTR) Zacks rank had jumped from 2 to 1, a rank that puts the company’s earnings revision momentum among the top 5% of companies ranked. Looking further, I found that estimates for both 2007 (yet to be reported) and 2008 had been hiked by more than $0.25 per share in the last 90 days.

Meanwhile, the stock has declined from $110 to $72 during the same period. A declining stock amid rising earnings estimates was something I had to investigate further. Upon doing so, however, my conclusion is that there may still be further downside in the shares.

One thing that has buoyed software stocks in recent years has been the consolidation wave. According to company filings, MicroStrategy “competitors that are primarily focused on business intelligence products include, among others, Actuate (ACTU), Business Objects (BOBJ), Cognos (COGN), Information Builders and the SAS Institute.”

Cognos is being acquired by International Business Machines (IBM - Annual Report) and Business Objects by SAP AG (SAP - Annual Report). Another competitor, Hyperion, was already bought by Oracle. It is increasingly looking like MicroStrategy is among the wallflowers at this dance.

And without an acquisition, things aren’t looking so hot fundamentally. A look at recent customer wins shows a concentration of retail, financial and healthcare markets. Not exactly the clients one wants during a consumer and financial crunch.

Indeed, it looks as though the toll was already being felt when MicroStrategy reported third-quarter results. Although gross accounts receivable were basically flat during the first nine months of 2007, the allowance for doubtful accounts was increased by nearly 50% to $2.8 million. This suggests that the company may be having trouble collecting from some customers.

Both net income and cash flow from operating activities declined during the first nine months of 2007. Though service and maintenance revenue grew, product licenses declined more than 3%. Since customers must license a product before they can service or maintain it, the falling product licenses suggest that profits may continue to fall, especially if customers indeed prefer the convenience of one-stop shopping offered by IBM, Oracle and SAP.

In fact, profits would have been lower still had MicroStrategy expensed all of its software development costs, as it did in early 2006. In the first nine months of 2007 $2.7 million of such costs were capitalized, and the capitalized software balance increased by $1 million. Had the development costs been expensed as incurred, cash from operations would have been $2.7 million (4%) lower and net income would have been $641,000 ($0.05 per share) lower.

The $84 million in free cash flow MicroStrategy generated last year amounts to a 7.5% free cash flow yield. This is more than the 100% premium to Treasuries that I would like to earn from my risky investments. However, the ongoing declines in cash flow mean that I want to be compensated for falling cash flow as well. Each percentage point of expected decline should equate to another percentage point of cash flow yield.

Using the 3% decline in license revenue as a starting point, and the 2.9% Treasury yield as a base, I would want to earn a free cash flow yield of at least 8.8% (2.9 + 2.9 + 3) on MicroStrategy. To get to that yield, the shares would need to fall to $57.

In the meantime, it just looks too risky for me.

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The following is a reprint of my January 18, 2007 RealMoney column.

Oracle’s (ORCL - Annual Report) agreement to meet BEA Systems (BEAS) half-way on price was hailed by InfoWeek as making Oracle a middleware powerhouse. “Among other things, BEA will add to Oracle its WebLogic and AquaLogic SOA and BPM tools, as well as its Tuxedo transaction processing monitoring software. BEA’s Java Virtual Machine technology also could push Oracle deeper into the hot market for virtualization software,” said the article.

Oracle has been leading the way in software industry consolidation, and this deal is another step in the process. When SAP (SAP - Annual Report) announced in October that they would be buying Business Objects (BOBJ), I hoped they were following Oracle’s lead. It is better business for SAP to integrate its software with that of Business Objects than to force its customers to do the integration.

In the past, there were just too many different application software vendors. The excess made competition stiffer than it needed to be and made it difficult for customers to integrate the different products. Oracle figured out that customers would be willing to accept the reduced competition in favor of reduced complexity.

Furthermore, software companies generate so much cash that these deals quickly pay for themselves. For example, Oracle’s free cash flow (the difference between the cash generated from operations and cash paid for new equipment) before acquisitions was $6.6 billion over the last 12 months. BEA has averaged another $200 million in free cash flow in each of the last three years. The combined companies will generate enough cash in the next 15 months to completely pay for the acquisition, leaving Oracle’s balance sheet as strong as it is today.

In my October article, I said a higher yield and growing free cash flow (at Oracle) compared with a lower, flat one (at SAP) is not much of a choice in my book. Since then, Oracle stock has continued to outperform, being down just 3.4% compared with a 12.6% decline in the S&P 500. SAP is down 9.8%.

An investor who likes the latest deal even more than I, of course, is Carl Icahn. I agree with James Altucher that piggybacking the best activist investors can pay off. Carl Icahn’s portfolio at Stockpickr lists a few other ideas.

Which brings me to the very first article I wrote for RealMoney, in which I said a cash flow upturn could carry Motorola (MOT - Annual Report) upstream. Motorola represents 25% of Icahn’s holdings.

In September I said “If Motorola can get to 2004 free cash flow levels and grow the cash flow a measly 2% per year from there, I estimate the stock would be worth nearly $23, more than 25% above the current price. Management could do that pretty much just by trimming R&D expenses to the 2004 level (which was all they needed to produce the previous hit product anyway).”

The obvious risk, of course, was that cash flow could move in the wrong direction. And it did. Free cash flow over the trailing 12 months ending in September was just $325 million, compared to the 2004 level of $2.5 billion. With the cash flow, the stock has also headed down – 19.1% since I wrote that article, compared with a 6.5% drop in the S%P over the same period.

At the new (lower) enterprise value, the free cash flow yield is just 1.2%. But turnarounds don’t happen in a day, and the CEO change only happened in late November. I don’t expect next week’s earnings report to be anything special, but I also think a return to pre-RAZR cash flow levels

And if it doesn’t, I expect Icahn will have lots to say about it.

This article was originally published at RealMoney on November 5, 2007.

Dassault Systemes (DASTY) is trading down nearly 6% after the company trimmed its earnings outlook by five Eurocents last week. The company now expects to earn between €1.96 and €2.00 in 2007, compared with earlier guidance of €2.00 - €2.05. With a solid overall business and a valuation that I believe looks reasonable, I think investors will ultimately find today’s price to have been an excellent entry point.

Dassault designs engineering software used for Product Lifecycle Management (PLM) (81% of 2006 revenue) and Mainstream 3-D design (19%). It has grown through organic growth and a series of acquisitions, including Abaqus in 2005 and MatrixOne in 2006 – each of which was in the order of $500 million consideration. It is 44.5% owned and effectively controlled by France’s Groupe Industriel Marcel Dassault.

Dassault offers software under several brands, including Solidworks for Mainstream 3D design and CATIA, DELMIA, SIMULIA and ENOVIA for PLM. However, a key aspect of its growth strategy is to combine the strengths of its various programs and allow customers to customize solutions using the company’s V5 platform.

The company generates 47% of its revenue in Europe, 31% in the Americas and the remainder in Asia. Although it blamed the lowered outlook on the weak dollar, the company’s latest annual report said its greatest currency exposures are between the Euro (its reporting currency) and the Yen, Pound and Korean Won.

More than half of the company’s sales are on a recurring (software rental or maintenance contract) basis rather than through perpetual license fees. With a largely industrial customer base, revenue growth drivers include business investment and industrial production in its end markets.

Competition

Dassault lists its primary PLM competitors as Parametric (PMTC) and Unigraphics, which was recently acquired by Siemens (SI). Its main competitor in Mainstream 3D is Autodesk (ADSK). The company also competes with Ansys (ANSS), Agile (AGIL), MSC Software (a href="http://stockmarketbeat.com/blog1/category/msc-software-mscs/">MSCS - Annual Report) and to a lesser extent Oracle (ORCL - Annual Report) and SAP (SAP - Annual Report).

The combined revenue of the nearest competitors and comparables, which I believe to be Dassault, Ansys, MSC and Parametric, has been approximately 11% annually over the last decade. Dassault has used its acquisitions and the opportunities provided by the V5 platform to grow at a faster rate than its peers.

In 2006 Dassault grew 24%, much of which was contributed by the Abaqus and MatrixOne acquisitions. On an organic basis sales grew 10% (12% assuming constant currency exchange rates.)

Risks

As I see it, the greatest risk Dassault faces is loss of a major customer. Although the company cites a customer base of 100,000 just 20 of those account for 25% of sales, with the largest customer accounting for 5%.

A potentially greater, though probably less likely risk is the company’s long-standing relationship with International Business Machines (IBM - Annual Report). IBM has a non-exclusive distribution relationship with Dassault and accounted for 45% of sales in 2006, so a rift between the companies could have a serious impact. The companies renegotiated the partnership earlier this year such that Dassault is taking responsibility for mid-market customers and IBM will serve enterprise customers. However, this adds a new risk related to maintaining a larger sales force.

Valuation

Dassault current market cap is approximately $7.3 billion, and with net cash on hand of nearly half a billion its enterprise value is about $6.8 billion. Given that it is on track to exceed its 2006 free cash flow generation of $300 million, the free cash flow yield of 4.4% compares favorably to the yield on five-year treasuries, and the 10% growth rate of recent years looks like a nice inducement for taking on the added risk.

By some common measures (5x book value and a P/E in the mid-20’s) the stock doesn’t exactly look like a bargain. But these measures overlook the cash flow generating power available to software companies. With essentially fixed costs and high margins, each dollar of sales contributes mightily to cash.

Although a recession or slowdown in Dassault’s key end markets or further dollar weakening could delay investor rewards, Dassault’s current valuation and long-term prospects appear to justify the wait.

Disclosure: Short naked put options on Ansys (ANSS)

Note: Set up high growth savings accounts and plan for your financial future today!

 This article was originally published for RealMoney on October 11, 2007

There has been plenty of hot air expelled this week over whether SAP’s (SAP - Annual Report) acquisition of Business Objects (BOBJ) is a sign that it is adopting Oracle’s (ORCL - Annual Report) big acquisition strategy or whether it is a simply a larger part of SAP’s existing strategy of using small “tuck-in” acquisitions. I’ll leave others to bloviate on those issues.

I am less interested in whether SAP is following Oracle’s strategy than whether they ought to be. And I think the answer to that question is a resounding “yes.”

For one thing, corporate IT buyers’ main concerns tend to be reducing costs and reducing complexity. Much better to have Oracle and SAP tie together the applications from a number of vendors (by directly integrating them) than to devote in-house IT staff to doing it. Research 2.0 criticizes the Business Objects acquisition for this reason, saying “SAP now faces many of the same incompatible architectural challenges faced by Oracle with its many acquisitions.” I think their customers would rather have SAP deal with the incompatibilities than to have to do it themselves. Since when is making life easier for customers a bad thing?

More importantly, however, there are just too darn many application software manufacturers out there. While consolidation in some industries occurs because the weaker businesses fail, software balance sheets are generally too strong to for this to happen. The only way to fix the problem of too many customers chasing a relatively fixed amount of dollars is for an industry leader to soak up the excess capital by leveraging its own balance sheet to acquire other companies - for cash, not shares. Oracle has been pursuing that fix.

Software companies tend to generate significant cash flow, and Oracle has been able to use this cash flow to fund the acquisitions while both maintaining a healthy balance sheet and avoiding dilution to existing shareholders. As an example, consider its first large acquisition – that of PeopleSoft in January 2005 for $11.1 billion in cash. Prior to the acquisition Oracle held more than $9.5 billion in cash and marketable securities on its balance sheet, and had virtually no debt. The company used this cash and a $7 billion bridge loan to complete the acquisition, and by the end of its fiscal year in May, 2005 it had reduced the loan value to $2.6 billion while still maintaining nearly $5 billion in cash and marketable securities and actually reducing its share count.

By May, 2006 the company had made another $4 billion worth of acquisitions (net of the cash held by the acquired companies) and increased its cash and marketable securities to $7.5 billion while restructuring its debt load to $5.7 billion in long-term debt. Even though the debt was $3 billion more than the prior year, most of that was offset by the increase in cash – meaning that the $4 billion in acquisitions was made possible almost entirely through cash flow from operations.

Speaking of cash flow, in the year ended May 2007 Oracle generated $5.5 billion of it from operating activities, and spent only $320 million of it on capital expenditures. That turns out to be a free cash flow yield of 4.5% from the existing businesses. Most of that continues to be invested in new acquisitions for new growth opportunities. The free cash flow has increased 55% since FY2005.

Meanwhile, SAP is generated approximately $2.0 billion in free cash flow last year, giving it a 3.0% free cash flow yield. Its acquisition avoidance has left the free cash flow essentially unchanged over the last three years (though arguably the change in the Euro/dollar exchange rate is providing growth.)

A higher yield and growing free cash flow compared with a lower, flat one is not much of a choice in my book.

If any doubt remains over which strategy is working better, one need only turn to a price chart. Since Oracle closed the PeopleSoft acquisition in January 2005, its shares are up 70% (mostly driven by rising cash flow), compared to just more than 30% for SAP over the same time. To me, it seems like that is exactly the type of “challenge” SAP would want to adopt.

With the much anticipated consumer slowdown now looking more likely it is becoming increasingly important for business to take up the spending slack. As I have mentioned before, that hasn’t been happening. Still, the GDP numbers are backward-looking by quite a bit so I thought I would take a quick look at what the enterprise software vendors are seeing in terms of pipeline.

Oracle (ORCL - Annual Report) says things are great.

Heather Bellini - UBS

Well, I just was wondering if you could comment on the pipeline this Q1 versus last Q1, given how well you outperformed last year?

Safra Catz

It’s significantly higher. I mean it’s really…

Heather Bellini - UBS

And that does mean Agile, right?

Safra Catz

No, no. And, in fact Agile shareholder vote will be in the middle of July, and none of this guidance includes Agile at all. So, assuming that we closed, let’s say sometime at the end of July, assuming a favorable shareholder vote which I do. It should be little bit higher, but Agile is a pretty small company compared to us. So, I think that the reality is the pipelines look extremely good. We took a brush through them and assumed lower closing rates than we usually use, and we still came up with this guidance.

(Excerpt from full ORCL conference call transcript)

BMC Software (BMC) is a little more circumspect.

Robert E. Beauchamp

We feel good about the pipeline in general for the rest of the year but the big deal pipeline is not as strong as say, for instance, last year’s pipeline in the second half. We had a really strong second half last year. This year, as we guided 90 days ago and again today, the first half of this year is a little stronger on a relative basis. So we are looking for a solid second half but not as many whales floating around out there in the second half of this year. That’s included in the guidance. There’s no change there. There’s nothing — there’s no new news there. That was in the guidance we gave when we set guidance originally.

(Excerpt from full BMC conference call transcript)

Business Objects (BOBJ) is reporting a good pipeline for its XI product upgrade cycle.

Adam Wood - Exane BNP Paribas

I just had two questions. The first one is on the services and gross margins. Obviously, a great performance there in terms of the improvement. Can you just help us to understand which side that comes from? We’ve seen it’s more on the actual [professional services business? And whether that type of margin profile is sustainable, going forward?

And then really just following up on a couple of your comments and a couple of your other questions, talking about the 65% of the installed base is now either migrating to or are on XI. I think from what we’ve heard from you in the past suggests that the percentage is higher in the Americas, and maybe even we’re getting to the stage when most of the installed base are either through or in that process. What should we expect from the Americas going forward? Should we maybe expect that geography to slow slightly as that upgrade matures? Or should we expect maintenance or even acceleration as they start to search and buy new products?

John Schwarz - Chief Executive Officer

Well that’s quite a breadth of questions. So let me start with the second part and I’ll ask you to restate the first one when I finish. Clearly, the migration process is moving along very well. We reported being around 50% of the population kind of in the process of migration in the last quarter. We’re running at 65% or better now. And if you look at the pipeline and the customers’ intention to buy and to migrate, it is a chock full off people who are lining up to execute.

(Excerpt from full BOBK conference call transcript)

And SAP says things are looking good.

The Americas came in with the eighteenth consecutive quarter of double-digit growth, which is quite a performance in itself. By the way, just to give you an indication and to give you a sense of the metrics, the U.S. has basically doubled over the last three years.

We continue to gain share against the competition in all of The Americas’ markets, including the U.S. We have the highest customer satisfaction in the Group. In fact, in The Americas, it’s an all-time high. And we see very strong performance in Latin America, in Canada, good SME performance across the board including in the U.S. And, therefore, this explains how we got to strong double-digit growth in The Americas.

If I look at EMEA, as you have seen already, very strong quarter, 17% in Software and Software-related Services. It was a balanced performance across the entire Continent. We had very strong performance in Russia, very strong performance here in the U.K., good performance in France, good performance in The Nordics and Germany came in single digit as predicted, and 7% is okay.

We see good overall economic environment. That helps, of course, the business as well. And in fact, what we do see is quite a lot of pent-up demand here in Europe. Many European companies are now trying to catch up when it comes to IT spending to what North American companies have done a few years ago. And in particular, that is noticeable in the small and mid-size business segment.

In Asia Pacific, extremely strong results in China and India, supporting also the strong growth in Japan. Asia Pacific Japan is clearly the growth engine for the Group in terms of growth rates. Actually, they do this in two ways; by their own organic growth, of course, but also by attracting investment from other regions into Asia Pacific Japan and, therefore, we can pull for more demand through what’s happening there.

(Excerpt from full SAP conference call transcript)

So altogether I would have to say that the outlook from software management teams looks decidedly more optimistic than the recent GDP data. Whether that optimism translates into the expected sales, and whether the sales growth related to 20% of GDP can overcome a slowdown in 65% of GDP (consumer) will be the next question for Wall Street to fret over.

Disclosure: Author is long IShares MSCI Japan Index (EWJ) at time of publication.

The Economic Calendar is fairly active this week.

• PPI (Tuesday) - Look for my usual breakdown of the industries with pricing power
• Industrial Production (Tuesday) - Let’s see if businesses really are picking up steam
• CPI (Wednesday) - We know food costs more. What else does?
• Housing Starts (Wednesday) - Preview: They will be bad, and if not it will be bad news.
• Leading Indicators (Thursday)

The Earnings Calendar is going into overdrive this week. Some names I’ll be watching:

• Tata Consultancy Services (TCS)  - What will they say on Monday about rising wages and currencies?
• Intel (INTC - Annual Report) - (Tuesday) - Estimates seem low enough. Margins will improve ex Flash.
• Yahoo! (YHOO) - (Tuesday) - Low expectations likely justified but perhaps rewarded.
• American Standard (ASD) - (Wednesday) - They are on my Large Cap Watch List (Track at Marketocracy) and they are on the move. They’re picking up momentum and I suspect they will top estimates.
• Silgan Holdings (SLGN - Annual Report) - (Wednesday) - They are on my Small Cap Watch List (Track at Marketocracy) and have been blowing estimates out of the water. This one seems like another beater to me.
• Advanced Micro Devices (AMD - Annual Report) - (Thursday) - Hard to see how it could get any worse, but if anyone can pull it off…
• Landstar System (LSTR - Annual Report) - (Thursday) - This is one of my favorite companies and is on both the Small Cap Watch List (Track at Marketocracy) and the Mid Cap Watch List (Track at Marketocracy). They are trading a touch higher than I would like, though.
• Google (GOOG - Annual Report) - (Thursday) - Numbers are set up for them to beat them. If they don’t beat by enough, however, the stock could still suffer.
• Sandisk (SNDK - Annual Report) - (Thursday) - Who knows?
• SAP (SAP - Annual Report) - (Thursday) - Shouldn’t be much to trade on, but they might say something nasty about Oracle (ORCL - Annual Report) to make listening to their call worthwhile.
• Tempur-Pedic (TPX) - (Thursday) This one also graces both the Small Cap Watch List (Track at Marketocracy) and the Mid Cap Watch List (Track at Marketocracy). Estimates have been rising but they will probably still beat them.

Keep on your toes!

Oracle (ORCL - Annual Report) reports earnings on Tuesday. Wall Street expects $0.35 in EPS on $5.6 billion in sales. The company has beaten numbers in three of the last four quarters and estimates have been creeping up, yet it has garnered a middling Zacks Rank of 3 (average) for earnings momentum. I still like what they are doing but the recent run-up leaves me somewhat nervous about the valuation.Important events on the Economic Calendar include:

• Retail Sales (Wednesday.)
• PPI (Thursday.) Look for my typical industry trends report.
• CPI (Friday.)

A little slow, still, but pre-announcement season should be heating up.

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BEA Systems (BEAS) is down following an earnings preannouncement:

BEA Systems, Inc., a world leader in enterprise and communications infrastructure software, today announced certain preliminary financial results for its fiscal first quarter ended April 30, 2007. BEA expects to report first quarter total revenues between $342 million and $347 million, with license revenue expected to be in the range of $111 million to $116 million.

Analysts had been expecting the company to generate $389 million in revenues.

“This quarter we saw a difficult selling environment, especially in the Americas, and several large deals slipped out of the quarter. During the quarter, BEA made several changes in our sales organization, especially in aligning our sales force around new products. We believe these changes are positive for BEA in the long run, but implementing these changes caused some disruption in the short run,” said Alfred Chuang, BEA’s founder, chairman and chief executive. “Several geographies outside the US performed well. AquaLogic had another strong quarter, especially the AquaLogic BPM product, and we are very well positioned to continue our leadership position in the SOA market.”

We have noted that the economic slowdown has been particularly pronounced with regard to business spending on equipment and software. Meanwhile, rivals such as Oracle (ORCL - Annual Report), SAP (SAP - Annual Report) and IBM (IBM - Annual Report) have all been fairly upbeat.
With a chart like that one, it was pretty obvious that somebody was going to miss on revenues.