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The Click2Learn / Docent Merger Key Competitive Messages October 2003 Jeffrey Muto

The Click2Learn / Docent Merger Key Competitive Messages October 2003 Jeffrey Muto. Introduction.

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The Click2Learn / Docent Merger Key Competitive Messages October 2003 Jeffrey Muto

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  1. The Click2Learn / Docent Merger Key Competitive Messages October 2003 Jeffrey Muto

  2. Introduction On October 21, 2003 Docent and Click2Learn, two of the leading providers of Learning Management Systems software products agreed to merge. This document serves as a guide to dispute claims made as part of the merge and to compete with and win against the new, merged company

  3. CLAIM #1: The merged company will be the new market leader with over 600 customers and more than $60 million in revenue Market Leadership? • If the merged company reaches the current, joint projected revenue targets, the company will own less than 6% of the 2003 LMS market – Is that the market leader? • Of the 300+ “customers” each company brings to the table, there is significant overlap – 600 joint customers is a stretch • The new company will be hard pressed to hit its revenue target as sales cycles elongate and deals are lost due to customer uncertainty surrounding the merge Oracle Momentum • Oracle has been adding customers at a more rapid rate than anyone in the market for more than a year with the current number of customers well over 300 • With analyst coverage of Oracle iLearning debuting last year, Oracle iLearning has already garnered the respect of ALL analysts in terms of our position in the marketplace • Oracle is the ONLY LMS vendor accelerating investment in its product and support infrastructure The Bottom Line The LMS market today is highly fragmented with no one vendor having more than 5% of market share (based on revenue). The joint company of Click2Learn and Docent will be no closer to leading this market than they are today. While the merged company continues to struggle, Oracle will continue to gain momentum through product innovation and strong execution.

  4. CLAIM #2The merged company will have the industry’s most comprehensive, integrated software suite with best-in-class capabilities Where Will the Product Go? • The product road map and technology platforms for the merged company are still undefined • Cost cutting will inhibit technology innovation and the ability to execute on the road map • New prospects will have to choose between two platforms nearing the end of their useful lives on the promise of future innovation on a third platform • Click2Learn appears to be taking the lead on product strategy which means more Microsoft-centric architecture • Neither company has an enterprise-class J2EE platform today, nor does it appear they will head in that direction Oracle’s World-Class Technology • Oracle iLearning is built on Oracle’s world-class J2EE technology platform • Oracle iLearning provides full integration with Oracle HRMS/ERP or can be integrated with other LMS or HR systems via Web Services • Oracle iLearning boast industry-leading scalability and stability with over 1 million users on a single instance and over 99.9% uptime The Bottom Line The technologies of both Click2Learn and Docent are antiquated. With the pending headcount reductions and market pressures it is doubtful this merged company will successfully deliver new technology anytime soon.

  5. CLAIM #3:The merged company will have “staying power” and is now a “safe buy” with vast resources and $40 million in the bank Financial Ineptitude: • Since March, 31, 2000 Click2Learn and Docent have burned a combined $127.5 million • Click2Learn has been forced to raise more than $21 million of operating capital through private placement equity since November 21, 2001 • Click2Learn lost NASDAQ stock listing on September 3, 2003 • Docent Chairman/CEO and CFO resigned in June, 2002 and July, 2002 respectively • Docent cuts 20% of its global workforce on May 17, 2002 as part of an “Initiative to Achieve Profitability” by December 31, 2002 Oracle’ Rock Solid Financials • Oracle made $2.3 billion revenue of $9.5 billion in fiscal 2003 • Oracle currently has $3.1 billion in cash and total assets exceeding $10 billion The Bottom Line Neither management team has show ANY ability to successfully lead their respective organizations to profitability. The combined $40 million bank roll will simply keep the combined company on life support. Mass layoffs will be part of the “20% cost reduction” plan. This company will not be a safe bet for customers. Oracle, on the other had, is a profitable company with a proven track record of financial stability. Note: All financial references are documented in published, public financial filings

  6. What the Analysts Are Saying On the Click2Learn/Docent Merger “This is the first major move toward consolidation in a very fragmented market. There is likely to be more consolidation among E-learning infrastructure companies.” – Michael Brennan, IDC On the Viability of Niche LMS Vendors “The entering of the “powerhouse vendors” such as Oracle into the LMS marketplace will put pressure on the current vendors, forcing many of them out of the market. To protect their E-learning investments, enterprises should do extra due diligence, especially in the area of vendor viability.” – James Lundy, Gartner Research June 13, 2003 On Consolidation of LMS Market “As a leading provider of technology and services to over 300,000 corporate customers, Oracle is a vendor that is positioned for the long haul. Consolidation of niche vendors will provide Oracle with a great opportunity to become a leading choice for customers who are looking for learning management solutions.” – The Meta Group, March 2002

  7. Summary • The Click2Learn/Docent merger was a move of survival not strategy– combined they lost $4 million on revenue of $15 million last quarter • The merged company will have to address product integration risks that result from the merger – we don’t believe they can execute • The new company will struggle to support customers of the soon-to-be-legacy products in the short-term and transition to the “new platform” in the mid-term. • Customers need to invest in technologies that are both capable of addressing current business needs and that can grow with their business – Not in technologies “under development.” • ORACLE IS THE MOST VIABLE LMS SOLUTION ON THE MARKET

  8. Questions Contact Jeffrey Muto jeffrey.muto@oracle.com 714.444.8323

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