PATCH FREAK NOW: Cloud providers faulted for slow response

Cloud providers are not using the mainframe and can't provide the same level of security. Aivars Lode avantce

PATCH FREAK NOW: Cloud providers faulted for slow response 

Pitting 90s technology against modern hackers is ‘no contest’

Hundreds of cloud providers are still vulnerable to the serious FREAK cryptographic vulnerability.

Skyhigh Networks found that 766 cloud services are still at risk 24 hours after FREAK was made public, based on an analysis of more than 10,000 different services.

The average company is using 122 potentially vulnerable services. The two stats taken together imply that more popular cloud services are disproportionately affected by slow patching against FREAK.

The FREAK (Factoring attack on RSA-Export Keys) vulnerability makes it possible for hackers to force browsers to use old ‘export-grade’ encryption and then decipher it in order to steal passwords and other personal information.

Websites as well as cloud services are potentially at risk. OpenSSL patched the vulnerability in January, while characterising the flaw as "low risk".

Although there remains no particular evidence of actual attacks this assessment has been revised this week and the vulnerability is now been treated as serious and easy to exploit on vulnerable systems, if not critical.

One in ten (9.7 per cent) of Alexa Top one million domain remain vulnerable (down from 12.2 per cent initially), according to a dedicated tracking site.

“If the website or cloud service you are accessing is built around Apache, and many are, FREAK is a serious vulnerability," said Nigel Hawthorn, EMEA director of strategy at Skyhigh Networks. "Until patches are made [applied], it’s a case of pitting 90s technology against modern hackers, which is no contest."

NCC Group associate director, Ollie Whitehouse, added: “The impact of exploitation of this vulnerability is in the worst case (Java/CyaSSL), where a threat actor is able to perform a Man-in-the-Middle attacks, the ability to impersonate any server and force the connection to clear-text facilitating eaves dropping and content modification."

FREAK, much like the POODLE SSLv3 security vulnerability before it, underlines the point that many websites and web services allow user to fall back onto cryptographic protocols that are hopelessly insecure.

Hawthorn commented: "The fact that base levels of encryption are still accessible on so many websites is alarming. In theory, these low levels allow any device to communicate with any website using the strongest encryption possible. However, no one is accessing their bank account from an Acorn Computer and FREAK serves as a timely reminder that they should be put out to pasture."

Cloud providers, much like enterprises, need to have pre-patching systems and testing regimes rather than applying updates in the hope they won't break something. Hawthorn accepted this point while arguing there ought to be exceptions.

"Sometimes you have to break with testing regimes because an urgent security vulnerability is in the wild," he told El Reg.

Skyhigh is not naming cloud providers who remain vulnerable to FREAK. However, Hawthorn indicated that bigger enterprise-focused services are among the "patching laggards".

"Quite a lot of popular, enterprise cloud apps remain vulnerable," Hawthorn told El Reg. "The bigger the service is the more likely you are to find some vulnerable server."

Skyhigh Networks' technology allows organisations to monitor employee cloud use and lock down banned apps. The security firm contacted each of the cloud providers affected and is working with them to ensure they are aware of their vulnerability and perform remediation.

Further details about Skyhigh’s data about FREAK can be found in a blog post here. ®

10 best uses for open source software in the business world

Open software continuing to take hold. Aivars Lode avantce

10 best uses for open source software in the business world

By Jack Wallen in 10 Things, March 5, 2015, 9:47 AM PST 

Open source offers some compelling benefits for businesses large and small -- but you might be surprised at some of the ways it's being used. 

Certain inevitabilities occur in technology. For instance, open source software will make its way into your business. Ten years ago, this could easily have been called into question. Now? There's no way to avoid it -- and there's no reason to. With so many powerful (and necessary) pieces of technology, open source has become, in various cases, the savior of tech. But what areas of your business are best suited for open source? The answer to that question is, of course, will be different from one company to the next. But some applications can apply in almost every circumstance.

Let's take a look at 10 possible best-case uses for open source software that can help make your business grow, bring you a level of flexibility and reliability you haven't experienced, or just save you a welcome percentage of your budget.

1: Server software

If you're still battling Microsoft's IIS platform, you need to experience Apache. The flagship open source web server software is one of the most widely used on the planet. It's free, incredibly reliable, easy to manage, and doesn't require the enormous overhead needed for IIS. But open source isn't limited to just web servers. If you need SMB sharing across your company, consider Samba. Samba 4 even integrates with Active Directory, so you don't have to worry about setting up separate user accounts on the Samba server.

2: Development

Developing with open source is a no-brainer. PHP, Rails, Perl -- there are as many languages to develop with as there are tools (from IDEs to bug tracking). There are a lot of options for developing for open source or with open source tools (as are there with proprietary development). The biggest difference between open source and proprietary is the access you have to the software code. Within the world of FOSS (free open source software) the code is readily available. For many developers, the Linux operating system has everything they need to develop, built right in (especially those who code without a full-blown IDE). If you do require GUI development tools, open source has you covered.

3: Security

The route to security is a challenging one, but there are many paths to success. You can opt for the "security in a box" solution and go with the likes of Cisco (a solid solution) or you can craft your security to perfectly fit your needs with the likes of iptables. Yes, the open source security route will take a bit more time to deploy (with a much higher learning curve), but the end results are generally incredible. This doesn't even address the idea that using open source on the desktop is, generally speaking, a more secure platform than most proprietary systems. Deploy Linux on the desktops and your security woes will drop dramatically.

4: Desktops

This area is where most of the pushback happens. However, you must take into consideration the fact that the daily workflow has undergone a major paradigm shift. Most of what we do now is done via a web browser. So why not deploy Linux on the desktop? Not only does it work with the majority of today's tasks, it will do so without suffering from viruses, malware, and updates that cripple a system. It's not perfect -- what platform is? But it's solid, and in the end, it can save you money. That's a win-win.

5: Workflow

Every business depends upon workflow. For some businesses, a smooth workflow depends upon tools. Open source has this arena covered. CRM, HRM, ERP, BI, BPM... you name it, open source handles just about every possible acronym you can think of -- and it does it very well. With the likes of Pentaho, Collabtive, and SugarCRM, open source can keep up with closed source tools any day.

6: Collaboration

Without the ability to work together on projects, your staff wouldn't be able to get the job done. So the collaboration tools you choose are crucial. You'll find plenty of quality collaboration tools within the world of open source. Cyn.in community edition, Zimbra Open Source Edition, and Kolab are just three examples of the excellent collaboration tools that exist within the open source world. 

7: Big data

When it comes to big data, open source can't be matched. Thanks to the likes of SUSE, big data and open source now go hand in hand. Innovations like in-memory data and live kernel patching make open source an ideal solution for big data. It can be perfectly tuned to meet the massive demands big data places on the platform. Closed source software can't touch this level of flexibility.

8: Cloud

The major players in the cloud are open source. Red Hat, Ubuntu, SUSE, Amazon, Rackspace -- they all get it and know that open source is the best solution for cloud deployments. But if you don't want to go with the larger companies, there are always up and coming tools like ownCloud, where you can either take advantage of its hosted cloud solutions or build your own. 

9: Multimedia

If your company does podcasting or video for PR, open source has you covered. With tools like Audacity and OpenShot, you can do just about anything with audio or video you need -- and do so on the cheap. In fact, you'll be hard-pressed to find a better podcasting tool than Audacity or an easier-to-use video editor than OpenShot. Both pieces of software do an outstanding job of creating professional-quality results without the steep learning curves or the high prices often associated with closed source tools.

10: E-commerce

If your business sells products online, you'd be remiss not to give a tool like PrestaShop a try. PrestaShop is, hands down, one of the most powerful e-commerce solutions available -- regardless of license. With just about every feature you could possible want (and some you probably haven't even thought of), the open source platform excels at e-commerce on every level. 

FOSS for business

Open source is no longer hanging around the periphery of the business conversation. In many instances, FOSS leads and dominates that conversation. If you've been looking for areas to consider deploying open source solutions, look no further than these 10.

Your turn

Have you added open source software to your business? If so, in what way?

IBM System x biz sales: The numbers are out... and they're not pretty

 The server market is changing dramatically. Aivars Lode avantce

IBM System x biz sales: The numbers are out... and they're not pretty

By | Paul Kunert 5th March 2015 17:02 

HP and Dell reaped the benefit

The extent of the slide in System x sales in Blighty during the final year under IBM ownership was laid bare today, and the eye-watering declines were bad: bad meaning bad, not bad meaning good.

The UK server market didn't exactly enjoy a vintage fourth quarter; spending declined 5.3 per cent to $503m and unit shipments went backwards too, dropping 11.5 per cent to 72.9k.

But though HP and Dell held their nerve to report gains on the same period a year earlier, IBM presided over a collapse in demand for its x86 line-up, figures from Gartner indicate.

In Q4 2013, IBM’s System x biz turned over $61m but fast forward a year and this had dwindled to a little over $31m, the beanie told us. For its part, Lenovo made $1.4m from its standalone server operation.

“As vendors go through a transition a lot there is a lot that occurs that will delay products both from an accounting and delivery perspective,” said Gartner research director Errol Rasit.

Two things customers demand of vendors are consistency and predictability, but there’s always a degree of upheaval during the transfer of a business from one owner to another.

“Lenovo was struggling to retain those customers through the transition so all its focus will be on executing this year after completing the acquisition,” added Rasit.

IBM agreed to offload the division in January 2014 but didn't complete the sales in most of the world until October, and was delayed in Europe until the start of this year.

Gartner said that with Windows Server 2003 support ending, Intel refreshing its Xeon range and cloud service providers building out data centres, sales were expected to do better in the quarter.

But some customers deferred purchases due to some lingering economic uncertainty and some decided to virtualise their estate more widely. Despite this, HP and Dell made ground.

HP, which itself is to trade as two separate companies from November and could be faced with customer issues of its own, grew factory revenues seven per cent to $182.6m, and Dell grew 9.6 per cent to $96.3m.

“HP and Dell benefited from the organisations that sought to defer spending with IBM and then Lenovo,” said Rasit.

We emailed Lenovo PRs in the UK, Europe and the US but have yet to hear back from them. ®

Autodesk (ADSK US)

Autodesk (ADSK US)

Elimination of Perpetual Pricing Feb 1, 2016 Is a Material Positive

Today Autodesk unveiled the second phase of the subscription transition with the announcement that perpetual pricing for most of its software products will be eliminated February 1, 2016. Instead, only subscription options will be available after this date, and this will drive recurring revenue that is growing 14% this year on the back of eliminating upgrade pricing on February 1, 2015. 

·        Two phase approach.  Recall that ADSK announced in its October 2013 analyst day that it would eliminate upgrade pricing on its products starting February 1, 2015 that went into effect three days ago. During the October 2014 analyst day, management then went a step further, announcing that it would eliminate perpetual license purchase options sometime in the next two years. We had been modeling that change to go into effect in October 2016, but today’s announcement brings forward that change to February 1, 2016.

·         Subscriber growth driven by subscription changes.Before the start of the move to subscription-only, about a third of ADSK users were on any type of subscription maintenance program. With the impending elimination of upgrade pricing announced, ADSK has added 284,000 additional subscribers in anticipation of the change. We expect the elimination of the perpetual option will drive additional purchasing leading up to the deadline and will cause more customers to become subscribers.

·        Recurring revenue means better lifetime value and cash flow.  Traditionally, the bulk of ADSK customers tend to purchase anywhere from every two years to every four years, but migrating the customer base over to subscription programs will drive recurring revenue ultimately to be the majority of revenue. That consistent yearly spend will lead to much higher customer lifetime values and higher cash flow, which we think is not currently reflected in the stock. These changes are the basis for why ADSK is one of our favorite names for 2015.

Win Sun, lose Sun: How Larry's bet on old-world systems hurt Oracle

Trouble in legacy software land, it looks like auditing your customers and not reducing the cost of computing just wont cut it. Aivars Lode avantce 

Win Sun, lose Sun: How Larry's bet on old-world systems hurt Oracle 

AWS and Salesforce match up to Ellison's hardware

By | Gavin Clarke 28th January 2015 09:05 

Oracle-Sun anniversary Feeling calm and relaxed? Join the Reg on a journey to an alternate reality where Oracle’s cloud business is the envy of all of its competitors. It holds two trillion objects and is growing faster now than at any time in its history.

What began as something for developers is becoming an enterprise IT staple – a platform for running critical apps and services for oil companies, retailers and media firms.

Microsoft and IBM, of course, got caught napping and are now hurling the kitchen sink into catching up: Microsoft has quickly built Azure and IBM has spent $1bn building additional cloud data centres to compete with Larry's cloud.

But Oracle is still setting the pace: cutting prices more than 40 times and effortlessly rolling out hundreds of new features.

Wake up, Larry... this is a all a dream – none of this is real. The truth is that we're describing the cloud juggernaut that is Amazon’s AWS. But... all this might have happened.

Let's go back half a decade...

Five years ago, Oracle purchased Sun Microsystems at what we can now see was an inflection point.

Sun-Oracle was old-world M&A – one big-tech firm swallowing another big-tech firm: the world’s biggest database maker gobbling a giant famed for servers and storage, chips and Unix, which, in its turn, had bought tape storage giant StorageTek.

In the old IT world of Compaq buys Tandem, Hewlett-Packard buys Compaq, HP buys Deloitte, Oracle buys PeopleSoft and BEA Systems, Oracle-Sun made perfect sense.

For Oracle’s chief executive, Larry Ellison, it was a steal, an alignment of perfect opportunity. He took Scott McNealy's loss-maker for just under $8bn and in return acquired Sun's considerable customer base.

He also scooped up the assets needed to turn Oracle into the Apple of the enterprise, from processors and servers through to middleware and apps.

Sun gave Ellison the engineering brains in chips through to systems and manufacturing plus the facilities that resulted in Exadata and Exalogic. In the past, Ellison had had to rely on partners such as HP and Fujitsu.

2010 was the realisation of a long-cherished dream of Ellison’s. Since 1998 he’d talked of marrying his software with hardware – a database in a box.

But more judicious thinking might have recognised that in 2010, a page was being turned in the IT playbook – with the cloud coming in and ownership of a systems business going out.

Have you been server-ed?

In the immediate aftermath, three years later, Oracle claimed Sun had paid for itself.

Oracle president Mark Hurd reckoned in 2013 that cash flow derived from Sun had exceeded the $7.4bn purchase price.

Two years later, the state of Oracle’s business says otherwise.

There’s been little to no pay-off from Sun’s mass-market served business.

It was engineered systems that were one of the prime motives behind Larry Ellison's decision to buy Sun: mass-market servers, running Sparc on Intel or Unix, were never a factor.

That business was already faling under Sun and its decline has done nothing but continue under Oracle.

In Sun's last good year before being bought by Oracle, 2007, sales for servers totalled $5.9bn. Of these, $5.2bn's worth were Sparc and it got $700m for x86 systems. In 2013, the last full year for Oracle, total systems sales were $2.3bn – $1.2bn from Sparc and $1.1bn from x86.

Oracle was right to sidestep the server mass market: today’s market would be unrecognisable to the server-pushers of 2010.

Cheaper vendors are invading from Asia, while spending in the enterprise has slowed.

Since 2010 we’ve seen the growth of hyper-scale computing users such as Amazon, Google, Twitter and Facebook. It’s this group that is the locus of server spending.

But this sect of the select simply aren’t buying off-the-shelf servers – rather than accept what they were given, these firms turned the supplier dynamic of old on its head, and are working with third parties who specialised in design and contract manufacturing to build the servers they want.

The problem for the server status quo of Sun-Oracle in 2010 is it is these hyper-scale web firms that are the growth opportunity – they are the ones buying the most servers.

The enterprise server market, by contrast, is down thanks to virtualisation and server and data centre consolidation, with CIOs spending on storage and networking instead.

The customer infection has spread: the Open Data Center Alliance, Open Compute Project and Project Scorpio all sprung up between 2010 and 2014, formalising users into groups working on common standards and designs in servers and data centers to help web-scale compute.

They have yet to make an impact on mass-market server designs, but they are seen as the new reality of IT and server and component makers are members and sponsors.

“The awareness of this other style of web-scale IT in the enterprise is gaining in popularity,” Gartner research director of data centre dynamics Errol Rasit told The Reg.

“Dev ops – thanks to Rackspace and AWS – is the first step in that direction.”

Oracle has now effectively withdrawn from the mass market and put its faith in low-selling, high-price and high-margin integrated systems.

Sun’s engineering brains and design and production brains was a win-win that has allowed Oracle to build the Exadata Machine and Exalogic Engineered Systems – the first Exadata was on HP.

Owning Sun meant Oracle could declare UDI on Exalogic and dump reliance on HP or anybody else.

Exadata has since become the best selling of nine Oracle engineered systems, with ExaLogic second, according to Gartner.

When it comes to selling systems that integrate server, storage and networking, Oracle is beating the competition, the analyst says.

Oracle in 2013 made $855m from what Gartner calls “engineered infrastructure hardware” – excluding the price of software – with IBM in second place on $212m and Hewlett-Packard third on $88m. From a relative perspective, Oracle has therefore gained from owning the Sun hardware business.

Oracle has hundreds of thousands of customers but has sold just a few thousands Exadatas; the growth opportunity is therefore on Oracle’s side. “There is a marketplace that sees the advantage of the performance of Exadata, and Oracle provides a single source of support and is very, very stable in terms of release cycles,” Gartner’s Rasit said.

But measuring up to IBM and HP is the wrong yardstick for Oracle in today’s climate.

It's hard out there for hardware

Oracle’s hardware business barely grew in its most recent quarter – up one per cent. Revenue made from hardware has been up and down since 2010 but the underlying trajectory is down. As a percentage of Oracle’s business, hardware revenue has fallen, too – at 14 per cent of $1.3bn.

Today, Ellison and his new CEOs – Mark Hurd and Safra Catz – make various claims about being the largest cloud SaaS company as well as predictions about how Oracle will become number one in cloud.

Total cloud revenue for the second quarter was up 47 per cent from a year ago in the most recent quarter.

The rhetoric is a mix of Oracle top leadership's bullishness mixed with the fact Oracle’s applications, platform and infrastructure as a service had actually seen more growth than rivals.

Shaking that AaaS

Most application-as-a-service providers like Salesforce and NetSuite are growing at around 30 per cent a quarter. SAP’s apps-as-a-service business is growing at a similar percentage.

But when it comes to raw dollars, the bullishness doesn’t translate. For once, the giant that places a famous premium on profit and measures things in how much it makes is weak.

Oracle’s cloud business raked in $519m in Q2, but there are two problems with that figure. The first is that hundreds of millions of dollars are peanuts for this giant – a mere one to two per cent of total revenue.

Its legacy, on prem-software licences and maintenance for things such as Oracle ERP or database are still the things that count - making up more than 70 per cent of business.

New software licences earned $2bn and $4.7bn respectively in that quarter. Where does Oracle’s cloud business sit vis-à-vis other app-as-a-service rivals? Oracle grew and earned more than NetSuite, but was behind Salesforce and SAP, which are also adapting to the cloud era.

The other problem is more one of embarrassment for Oracle, because it shows the wrong strategic bet was made in 2010 in buying Sun – because, after all, cloud is now growing faster than hardware.

Or, put more bluntly, cloud is growing. The engineered systems sector is not.

It's amazing, that Amazon

First, let’s take AWS, the yard-stick on infrastructure and platform-as-a service.

Not only is Oracle’s cloud revenue peanuts next to that of AWS, but Amazon's web services business is actually making about the same as Larry’s engineered systems business – and it’s growing faster.

That’s an organic business, rather than one which Amazon would have had to spend money on – like, say, the Sun acquisition.

Amazon doesn’t break out the AWS revenue as a separate line in its spreadsheet, reporting it simply as “other”.

That “other” business was growing nearly as fast as Oracle, 37 per cent, in Amazon’s Q3 but making about the same as Oracle’s hardware systems products – $1.34bn.

AWS has now been valued as a possible $38bn business – making it so lucrative that it would be the subject of a bidding war should Amazon spin out the business, according to one analyst.

Amazon’s size is a product of its momentum, which was provided from having started first with AWS – in 2006.

How about software-as-a-service? Salesforce grew 29 per cent in its most recent quarter, again making around the same amount as Larry’s hardware business: $1.38bn.

Again, this has been organic growth for Salesforce in its core – not the product of customer acquisition through M&A.

Two years after AWS and nine years after Salesforce, Ellison was laughing off cloud as a passing fad. Two years after that, Ellison spent nearly $8bn swallowing Sun. His initial response was to sell more Oracle – flog Oracle systems and databases to those building clouds. Now, he’s come full circle, becoming a cloud service provider.

Every cloud service Oracle is now offering, all of which it claims are industry-leading, were launched in the years after following the Sun deal and following Mark Hurd’s 2013 claim of payback.

Oracle’s database-as-a-cloud service, Java cloud, storage cloud, big-data cloud, integration cloud and the rest came between 2012 and September last year.

It was in 2014, too, that Oracle finally rolled out a version of its flagship database capable of multi-tenancy, a cornerstone of Salesforce’s cloud service architecture.

Oracle 12c is now the foundation of Oracle’s elastic clouds and available to customers who want to build their own private clouds running on Oracle middleware.

The opportunity is there for Oracle hardware that may yet justify buying the Sun systems business.

Exadata has only been sold to a few thousand customers and the Oracle customer base is 300,000. That’s “opportunity”.

But sales are slow: Oracle is working hard to woo those who are happy buying everything from Oracle for the integrated technology stack or simplified purchasing and support.

It’s not like nobody saw something like AWS coming. Or even Salesforce – Larry was an early, founding investor in the latter. AWS launched in 2006, Salesforce in 1999. Cloud computing was already a “thing” by the mid-2000s.

Even Sun twigged to cloud computing – way back in 2004: its version was called “utility computing” and it charged $1 per hour. But Sun fumbled the execution and it killed the service in 2008.

Ellison isn’t the only one in enterprise IT to have overlooked the rise and importance of cloud computing, or to think it could either be contained or parleyed away.

Like SAP, Hewlett-Packard, IBM and Microsoft, Oracle is scrambling to make money as a provider of hosted cloud services by hosting other people’s data. Surprise – its fastest growth is in selling subscriptions to online versions of its software.

Unlike these others, however, Oracle’s CEO didn’t just avoid a burgeoning market – he closed his eyes more tightly.

Oracle cloud business could still haul past AWS, but it has handicapped and set itself back in getting there. ®

Check Point Software: Downgrading to Neutral

Another legacy software company with issues. Is this a trend? Aivars Lode avantce

Check Point Software: Downgrading to Neutral

Neutral

Following a good year of performance in 2014 we think share performance in 2015 will more likely be in line with our overall coverage and so we are downgrading to Neutral from Overweight. 

·         Shares outperformed in 2014 as growth improved and repurchases increased. CHKP stock was up 22% in 2014 as compared to only 12% for the S&P 500. The main reasons for the outperformance were that revenue growth improved on the back of better product and license growth (5.4% last quarter from 2-3% in March) and a mix shift to the faster-growing subscription blade revenue. 

·         Growth likely to stabilize in the 6-7% range. We are looking for another good year of security spending in 2015, growing more than double the forecasted increase in IT spending, and that should help keep revenue growth up for CHKP. But we do not see growth getting back to double digits in the near future. 

·         Firewall refresh at normal levels with focus on NGFW. Our communications with CSOs/CISOs (Chief Security Officers/Chief Information Security Officers) the last couple of weeks indicate about 20-25% will be focusing on a firewall refresh in 2015. That is normal in our judgment given the 4- to 5-year lifecycle of a typical firewall. 

·         Valuation not expensive, but less compelling than last year.At this time last year CHKP was trading at ~11x on 2015E EV/FCFF as compared to 13x on 2016E today. Given our outlook for 6-7% revenue growth in 2015-2016 and limited margin improvement, we feel the valuation has less room to expand. We note that with ~$3.6B of cash still on hand, management will continue to look for value-enhancing moves. In fact, we still consider this a solid large cap, liquid stock for investors looking for exposure to security. We just believe performance will more likely match that of our overall coverage over the next year. 

·         Increasing December 2015 price target to $83. This price target is based on ~14x EV/FCFF on 2016 estimates. 

Aspen Technology: Downgrading to Underweight and Lowering Estimates on Oil Impact

Oops. Aivars Lode avantce

Aspen Technology: Downgrading to Underweight and Lowering Estimates on Oil Impact

January 22, 2015

Underweight

Today we are downgrading Aspen to Underweight from Neutral to account for the impact of oil trading below $50. We believe at these levels demand is seeing an impact as we watch companies in the oil industry starting to lay off workers. Our new estimates cause our DCF-based price target to come down to $36 from $46.50. 

·         Oil below $50 should impact demand. The previous CEO of Aspen talked about oil prices in the mid $60s having a negative impact on demand, while the current CEO on last quarter’s call said sustained pricing in the $40s would cause an impact. Based on current oil prices, recent layoff reports, and conversations with customers and competitors we believe demand is taking a hit. 

·         Oil industry layoffs provide negative backdrop. We have seen a number of oil-related companies announce layoffs of varying sizes, and while AZPN does not have customer concentration to any of these specific companies we believe the news is indicative of what is happening in the space. 

·         Oil prices expected to remain low through 2015 and 2016. J.P. Morgan commodity research is now forecasting oil to stay below $50 in 2015 and below $60 in 2016, indicating a slower recovery in prices that may provide a diminished backdrop for spending on solutions from Aspen. 

·         Two factors make this dip more difficult to analyze. In the last major dip in January 2009 Aspen saw bookings growth dip toward the mid single digit level (measured as TCV at that time), but at that time there was a shifting business model and go to market changes in process. This time around the overall domestic economy is better and it could be argued that the cost of producing oil is lower so we may not see as much of a slowdown in production. This is why our annual customer spend growth forecast bottoms at 8% and not 6%. 

·         Lowering our price target to $36. Our price target is based on our DCF using a 12% discount rate and 2% terminal growth rate, and implies an EV/FCFF multiple of 18x on FY16.