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Ah, but take a closer look!
Or, SAP are way out in front
(Written in October
2002 when SAP were considered down and out)
"Stock shock as SAP
customers drop out" says Reuters.
"SAP shares fell more than 7 percent to close at $19.70,
a new low" it continues.
"companies that had verbally agreed to buy its software
suddenly pulled the plug" it went on.
Another headline - SAP AG downgraded by UBS
Warburg
What's going on? Is the party
over? Time to dust off those COBOL skills or head for the hills?
TheSpot4SAP.com have in the
past disagreed with current thinking - notably with our
Crunch Time and
Rocky Road articles which went down
like lead balloons within certain circles during the year 2000. We
value our independence and will continue calling it as we see it.
However, we are very happy to
say that we see the bad press over the past few weeks days as very much
overblown and a little bit hysterical, and this is why.
Start with the downgrade. Yes,
UBS Warburg have downgraded SAP stock, but from a Strong Buy to a
Buy. That's not bad in this current market. So enough of that. Move
onto their actual forecast for full-year revenue growth and you see
that they have cut their forecast from growth of 15% to between 5
and 10%. Ok, so it's a miss of their targets but if they manage 5 to
10% growth over last year that's still pretty blooming good. How
many companies are growing at that rate these days? And on top of
that "the firm still expects its
operating margin to increase by one percentage point from the 20%
achieved in 2001" according to
Dow Jones. Who else is increasing operating margins to 21% these
days?
In fact, we think that SAP have
positioned themselves brilliantly over the past two years for the
following three reasons:
1. Industry solutions. SAP are
continuing to develop 21 industry solutions while keeping the core
intact. With thousands of developers hard at work at this, how are
their competitors ever going to catch up?
2. Installed base. The above development is happening on top of a
massive installed base. Latest claims we have heard are 50,000
implementations. This installed base is a huge advantage and again,
how will their competitors ever catch up?
3. New dimension products. As well as the industry solutions, SAP
are pushing ahead with their new dimension products such as SRM, PLM,
CRM and also mobile and portals. These products are new in the
marketplace, but they are certainly not sitting on their hands.
In all, they might not have
managed the financial markets very well (not for the first time) but
no-one can touch them in their core business of Enterprise software.
Having said all that, Microsoft
is on the move and that is never good news for their competitors.
We'll have to watch that space very closely.
One final quote comes from CNET who
report that "During the first quarter of 2002, amid a booming
manufacturing sector in China, SAP sealed three contracts for its
Enterprise Resource Planning (ERP) solutions, SAP said in a
statement. SAP's traditional ERP solution, called R/3, provides ERP
functionalities, which help businesses manage areas such as product
planning, purchasing, warehousing, transportation and human
resources. Announcing these deals at Sapphire, its e-business
conference in Florida Friday, Henning Kagermann, CEO and co-chairman
of the German business software maker, said: "We have consistently
achieved 50 percent annual revenue growth over the last few years
(in China)." This year, the company expects to exceed its past
performance, SAP Greater China President Klaus Zimmer told CNETAsia."
Hmmm ... China ... now there's
a growth market!
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