Bloomberg News

Rimini Street to Delay IPO to Fight Oracle Lawsuit, Founder Says

December 13, 2011

Dec. 12 (Bloomberg) -- Rimini Street Inc., which offers discounts to maintain software installed by SAP AG and Oracle Corp., plans to delay its initial public offering until after a lawsuit by Oracle is resolved.

The U.S. company alleges that Rimini infringes its copyrights when it provides support to its customers and a trial date has been set for January 2013, Rimini founder Seth Ravin said in an interview in Frankfurt today.

“We’re going to have to push the initial public offering to probably a couple of quarters after that. It’s now going to be the back half of 2013,” said Ravin. Rimini, based in Las Vegas, Nevada, as recently as Oct. 3 said it aimed for an IPO in the second half of next year. Ravin, 45, owns a majority stake together with friends and family while venture capital firm Adams Street Partners Llc controls 20 percent.

Oracle filed its suit against Rimini Street on Jan. 25, 2010, claiming “massive theft of Oracle’s software and related support materials.” Oracle gets almost half of its revenue from upgrades and support, less than SAP. Ravin likened the Oracle lawsuit against Rimini, which had sales of about $24 million in the first three quarters of the year, to music publishers fighting digital music downloads.

“For them this is the last stand, they are not going without a fight,” Ravin said, who is in Germany to visit customers. “But you can’t stop change with litigation.”

The case is Oracle USA Inc. v. Rimini Street Inc., 10cv106, U.S. District Court for the District of Nevada, Las Vegas.

Damages

Ravin founded Rimini in 2005 and co-founded TomorrowNow, which SAP acquired in 2005. Since then Oracle sued SAP, saying TomorrowNow unlawfully copied software products and other confidential materials. SAP has said it is liable for “certain” claims. A court in Oakland, California, suggested on Sept. 19 that SAP may be liable for $272 million in damages, overturning a previous $1.3 billion damage awarded to Oracle by a jury.

Rimini’s revenue will probably increase about 30 percent to 40 percent a year until the lawsuit has been resolved, Ravin said, forecasting that revenue will grow by 33 percent this year.

“When we get to the other side of litigation, we expect to return to 100 percent growth,” he said. “We’re feeling very good that we’ll win on all points.”

A victory would encourage others to enter the market, much like “today, digital music is a multi-billion dollar industry that everyone wants a piece of,” according to Ravin.

Customers include German engineering firm Siemens AG, St. Paul, Minnesota-based 3M Co., and Brazilian aircraft builder Embraer SA, Ravin said.

Cloud No Threat

Ravin said he’s not concerned that companies increasingly using software as a service -- purchasing and consuming software over the internet -- will threaten Rimini’s business model. Companies will continue to need software to handle activities within areas such as finance and manufacturing on their own computers, rather than on a so-called cloud, because they require high levels of customization, according to Ravin.

SAP agreed to buy SuccessFactors Inc., a provider of talent management software on the web, on Dec. 3, six weeks after archrival Oracle agreed to acquire RightNow Technologies Inc. Both aim to gain a foothold in a market expected to more than double to $148.8 billion by 2014, according to researcher Gartner Inc.

“To put your whole business on software you don’t own is sort of like renting a car,” Ravin said. “If you’re going to spend millions of dollars to customize it, wouldn’t you want to own that car? We’re trying to tell people there’s no reason to move anything, we can cut the costs in half from what you have today and you can drive the car for another 100,000 miles.”

--Editor: Marthe Fourcade, Simon Thiel.

To contact the reporter on this story: Ragnhild Kjetland in Frankfurt at rkjetland@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net


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