SAP, Europe's leading software company, said it was mulling a sale of its TomorrowNow U.S. unit, which is at the centre of a legal battle with arch-rival Oracle.
SAP said in a statement that the chief executive of TomorrowNow -- which SAP has admitted carried out "inappropriate downloads" of Oracle material -- had resigned along with an undisclosed number of other executives.
Executive Chairman Mark White, who was installed by SAP to oversee the business conduct of TomorrowNow, will run the company. An SAP spokesman said Chief Executive Andrew Nelson and several other TommorowNow executives had resigned for "personal reasons" and declined to comment further.
"SAP said it is considering several options for the future of the TomorrowNow business, including (its) possible sale," SAP, the world's biggest maker of software that helps companies automate and standardize business processes, said Monday.
The German company ordered Nelson to report to White after U.S.-based Oracle sued SAP for "corporate theft on a grand scale," a charge that stemmed from TomorrowNow acquiring Oracle customer-support documents.
"It certainly doesn't look good for SAP when you have the management team leave under a cloud," Cowen & Co analyst Peter Goldmacher said of the departure of TomorrowNow executives.
"SAP has always enjoyed a reputation of being above the fray and a kind of gentleman in business while Oracle had a reputation for being a little bit more brass knuckles," Goldmacher said. "This certainly tarnishes SAP's reputation."
SAP bought TomorrowNow in 2005 to try to convert Oracle customers into SAP users through TomorrowNow's expertise in providing support for software made by PeopleSoft and JD Edwards -- companies that had become part of Oracle during a $20 billion buying spree.
Oracle charges that TomorrowNow, which is entitled to download some Oracle customer-support materials on behalf of customers its represents, abused this right to amass a library of Oracle documents which it shared with SAP.
SAP revealed in July that the U.S. Department of Justice was probing TomorrowNow's business dealings.
Oracle declined to comment on the changes at TomorrowNow.
Oracle and SAP are fighting their legal battle in U.S. District Court in San Francisco, where a status hearing in the case is scheduled for early next year.
SAP has said it is willing to consider a settlement but Oracle has so far signaled no interest in such a resolution.
Cowen's Goldmacher said the TomorrowNow scandal has become "a bit of a sideshow" to the broader competitive battle between Oracle and SAP. He recommends investors buy Oracle shares while cautioning SAP may underperform the market.
He said Oracle's strategy of relentlessly acquiring three-dozen companies in the past three years has marginalized SAP's dominance in business applications, transforming Oracle into a broad-based supplier not just of applications, but also middleware and databases that can all work together.