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Thursday, July 13, 2006

Most Widely Traded 48 Hour Clock: SAP Sinks Oracle

Stocks: (ORCL)(SAP)

24/7 Wall St. has begun coverage of the 36 most widely traded stocks, eighteen each from the NYSE and the NASDAQ. Most of these stocks trade over 50 million shares a week. This new feature will highlight each of the 36 stocks at least every 48 hours giving investors fresh infomation and perspective on the companies whose shares are most likely to move the broader markets.

Someone threw a piece of kryptonite at SAP's stock today. The big enterprise management company said its licensing revenue was up only rose 8% to $790 million in the qaurter ending in June. According to the Associated Press, Wall Street was looking for an increase of 17%. SAP's shares fell 7% to $47. The stock was trading below $40 in April 2005, so it has still run 18% since then.

Rival software company Oracle initially fell on the news dipping below $13.80 before recovering to $14.25, which is about where it has been trading since mid-June.

Wall Street caught itself in a classic trap, especially in a down market. It assumed that because one company in an industry was doing poorly, so was its competition. One of the footnotes in its annoucnement was that SAP lost 1% to 2% of its market share to rivals. That would happen to be Oracle.

When Oracle announced earnings on June 21, it made it clear that there were better days ahead. Its revenues were up 25% to $4.851 billion. The company also announced that earnings for the next quarter would grow 11% to 15% over the previous year.

The SAP new should not be taking Oracle down. If the German software company is indeed losing share to Oracle, shares in the US company should be moving back toward $15.

Douglas A. McIntyre can be reached at He does not own securities in companies he writes about.

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