Arrogance is tough to define as it is both an actual emotion but often it is a perceived emotion. I've heard the term used in conjunction with Rational by their competitors (naturally), their customers (not good), their prospective customers(not good) and their service partners(not good). They are the gorilla. People have said MSFT was arrogant for years- and they still use their products, right? It is easy to hate #1 and often arrogance is a sign of being #1- which is where you want your equity investment, right? I wouldn't look at it as anything that will impact their product revenues or stock price. If I remember correctly, I was saying that arrogance would probably limit the success of Catapulse to be able to line up Mercury, QSS, Continuus, Princeton Softech, Compuware, Sterling and others to offer products through the Catapulse ASP. IMO, the closer Catapulse is to Rational, the less likely the other companies will participate (maybe RATL doesn't give a shit about that? Probably).
However, if it is just a RATL ASP, then someone, I think on Yahoo, had asked whether it would cannabalize their sales channel. It sure does, no question about it. Silicon Valley will be flooded with RATL sales rep resumes very shortly after Catapulse makes its move. Either that, or most people at RATL will want to leave RATL and go to Catapulse- the upside is MUCH larger at Catapulse than at RATL. They are obviously going to try to to IPO Catapulse. Would you rather be at RATL, basically a conservative software development company that has appreciated to a fair market value or move to the new company, an ASP (red hot) with 50M invested, a great CEO, the support of huge company, ability to piggyback relationships with MSFT, SUN, HP and others where your stock options are at a miniscule strike price (although with the investment, they are no longer that low) and the vesting on your RATL stock could probably be negotiated if you flipped to the new company. I would be willing to bet that they are lining up outside of Paul Levys office...
To finish the thought on cannabalizing the sales channel, lets say that Catapulse signs a "sales" agreement with RATL, so that RATL sales get commissions on deals they send to Catapulse. Well now RATL is seen as reducing their product revenues over time- by shifting it to Catapulse. Maybe that is returned due to RATL owning equity in Catapule, but as a RATL shareholder, this is an diluted return as it was NOT a spin-off- it was a new company with an investment. That means that we don't get shares of a publically traded Catapulse based on a ratio driven by our shares in RATL.
Finally, unless they engage other vendors to work with Catapulse, to offer a true industry "portal"/ASP, then it will always been seen as a sales vehicle for RATL products- limited credibility from a true industry perspective and damaging to their internal sales.
I'm out of most of my RATL, have held on to a little because I still think there is good strong growth and their is little downside, but I'm playing the B2B, Telecommunications and Wireless sectors.
Hope that clarifies my thoughts. |
