Enter multiple symbols separated by commas

SAP Shares Fall 10% on Weak Fourth Quarter Guidance

Software giant SAP missed market expectations and its own forecast for fourth-quarter license sales, as growth slowed in the United States, knocking its shares down more than 10%.

Fourth-quarter license sales -- which are key to future service and maintenance revenue -- were about 1.26 billion euros ($1.63 billion), less than the 1.348 billion euros average forecast in a Reuters poll of 23 analysts.

For all of 2006, license sales grew 11%, or 13.5% in constant currency, far short of the goal the company set of 15% to 17% in constant-currency growth.

SAP, which is the world's biggest maker of business software, but faces increasingly fierce competition from arch-rival Oracle, gave no reason in its preliminary results statement for the weaker performance.

But it said its license sales in the United States -- its traditional sales driver -- grew just 4%, or 15% at constant currencies. That compares with growth of 15%, or 20% at constant currencies, in the third quarter.

SAP makes much of its revenues in U.S. dollars, but has a large cost base in the euro zone, meaning the strong euro hurt its results.

But the company said its share of the core enterprise applications market rose 3 percentage points year-on-year to about 24.2% at the end of 2006.

SAP trades at about 23 times forecast 2007 earnings, according to Reuters Data, significantly more than Oracle's 16 times expected 2006-2007 earnings.

Oracle, a database specialist, has spent billions of dollars buying companies in the faster-growing software applications sector in recent years to better challenge SAP on its own ground, but that strategy is as yet unproven.

Contact U.S. News


    Get the best of CNBC in your inbox

    Please choose a subscription

    Please enter a valid email address
    To learn more about how we use your information,
    please read our Privacy Policy.

Don't Miss

  • Ferrari 488 Spider

    Ferrari's new 488 Spider will have a V-8 turbo engine and a retractable hard-top roof that lowers in just 14 seconds.

  • FDA bans import of some Cilantro as annually recurring outbreaks (in 2012, 2013, and 2014) of cyclosporiasis in the United States which have been associated with fresh cilantro from the state of Puebla, Mexico.

    The FDA announced the partial ban after some cilantro was linked to 2013 and 2014 outbreaks of stomach illnesses in the US.

  • Thomas Lee

    This year's flat market is reminiscent of 1904, says Thomas Lee of Fundstrat Global Advisors in an interview with Amanda Drury.

U.S. Video

  • Bull v. bear on Twitter

    Rob Sanderson, MKM Partners, and Michael Graham, Canaccord Genuity, discuss their outlook on Twitter amid earnings.

  • Woman questions

    Manisha Thakor, Director of Wealth Strategies for Women at The Buckingham Family of Financial Services explains, Required Minimum Distributions (RMD) and the impact this could have on your retirement.

  • Bill Harris, CEO of Personal Capital explains Treasure Inflation Protected Securities, also known as TIPS.