September Surprise

Plumtree Software To Sutter: No Thanks

IE Index Peregrine Systems Inc. Announced it will reduce its revenue over the last 11 quarters by $250 million. Credibility will be hard to come by in 2003. SAP AG Landed its largest customer win ever for mySAP Enterprise Portal (from Siemens AG) and began its roll-out of a new, friendlier interface for its enterprise apps. Silicon Graphics Inc. Is making high-end storage management a cornerstone of its turnaround strategy. Is SGI offering the right product at the right time, or too little, too late? INDEX LEGEND HOT — On the upswing NOT — Possible trouble ahead STATUS QUO — No change

Count the "Plumtree Affair" among the more bizarre business stories of 2002.

On Sept. 4, Plumtree Software Inc., a leader in the corporate portal software market, received an out-of-blue offer for all outstanding stock (for $5 per share, $2 over the current share price at the time) from Sutter Opportunity Fund 2, an investment arm of Sutter Capital Management. Sutter gave Plumtree until Sept. 10 to review the offer, but by the following day, Plumtree's board and management had rejected even the idea of discussing it.

As reported by InformationWeek on Sept. 4, Yankee Group analyst Rob Lancaster characterized Sutter's proposal as an "attractive and aggressive offer" that Plumtree would do well to consider. But according to research director Hadley Reynolds of the Delphi Group, who closely monitors the corporate portal industry, the Sutter offer was "almost an insult" designed to "play on investor panic" theoretically created by the steep decline in Plumtree's value after its IPO three months earlier. And in a previous opinion, Delphi Group had called Sutter's proposal one that "Plumtree not only can refuse, but must."

In a statement released after Plumtree's response, Sutter president Robert Dixon spoke of Sutter's disappointment about the decision and its hope that "Plumtree's officers and directors will take a more proactive approach to maximizing shareholder value in the future."

— Justin Kestelyn

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