SAP says preliminary results show it will claim its 16th consecutive quarter of double-digit software revenue growth.
SAP released preliminary earnings on Jan. 14 that should give it something to crow about next time Oracle trots out its metrics on how
much it is beating SAP at the applications game.
The software company, which a year ago missed its fourth-quarter guidance, said in a
statement Jan. 14 that total sales were up 10 percent to 3.25 billion euros, or
$4.8 billion., from 2.95 billion euros for the same year-ago period. SAP is
scheduled to release its fourth-quarter 2007 earnings on Jan. 30.
The company said it expects fourth-quarter software sales to total 1.41
billion euros for the quarter, an increase of about 14 percent from 1.24
billion euros in sales in the fourth quarter of 2006. SAP said full-year 2007
software revenues are expected to be about 3.40 billion euros, up from 3
billion euros in 2006 by about 13 percent. "This represents the strongest
constant currency increase, about 18 percent, in the software revenue since
2000," SAP officials said in a statement.
SAP said it expects total revenue for the year to increase about 9 percent
to 10.26 billion euros, up from total revenue of 9.40 billion euros in 2006.
SAP also said that after a preliminary review of its 2004 fourth-quarter
results it believes its market share in the enterprise applications sector that
it hotly contests with Oracle has increased to about 28.5 percent-a 1.5 percent
increase over the same year-ago period.
Oracle began acquiring software companies at a rapid clip in 2005 with the
goal of beating SAP, considered the world's largest business applications
vendor. Despite Oracle's accumulation of companies-it's acquired some 42
companies in almost as many months-SAP is still ahead, according to analysts,
although it's not clear how long there will be a gap between the two companies.
On Dec. 20, 2007,
Oracle reported that its software license sales were up 38 percent to $1.67
billion for its fiscal second quarter. Based on those numbers, Oracle forecast
that 2008 sales would rise between 15 and 25 percent for its third quarter.
SAP said its strong performance in the fourth quarter represents the
quarter of consecutive double-digit growth in software
and software-related service revenues.
Wedbush Morgan Securities analyst Michael Nemeroff said in a Nov. 15
research note that despite SAP's breakout quarter, he remains on the sidelines
due to the possible challenges SAP may face in integrating its acquisition of
Business Objects, which is expected to close this quarter. He said he is also
concerned about the execution risk surrounding the company's small and midsize
business product strategy, which many investors are expecting to drive growth
at SAP over the next several years.
"Despite higher than expected license revenue in Q4, we believe that
over the next several quarters SAP's operating results could be impacted by a
economy as weakness extends beyond the financial services vertical," Nemeroff
wrote. "[SAP's] results in the Americas
were decent on a constant currency basis, although the decline of the dollar
relative to the Euro once again negatively impacted reported revenue