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Tuesday, September 26, 2006

Market Buys Oracle’s Bravado, Shorts SAP’s

By William Trent, CFA of Stock Market Beat

Last week we took a self-congratulatory victory lap when Oracle’s earnings confirmed our thesis from earlier this year. As Eric Savitz pointed out, we weren’t the only ones.

n the earnings press release, Oracle Chairman Larry Ellison said:

“SAP appears to be rethinking their strategy as they lose application market share to Oracle and confront the difficulties of moving their application software to a modern Service Oriented Architecture (SOA),” said Ellison in the release. “They’ve just announced that they are delaying the next version of SAP applications until 2010. That’s a full two years behind Oracle’s scheduled delivery of our SOA Fusion applications. And now [SAP CEO Henning] Kagermann is talking about an acquisition strategy to augment SAP’s slowing organic growth. These are major changes in direction for SAP.”

That would indeed be a change for SAP, which previously only imitated Oracle’s bad moves. However, SAP fired back with their own press release, saying:

Since January of 2003, SAP has consistently articulated and delivered on its vision for enterprise SOA following a course of organic growth combined with strategic acquisitions. SAP offers customers market-leading, enterprise SOA applications today while Oracle’s next-generation applications exist only in PowerPoint and won’t be delivered until 2008 or beyond.

Hmm… he said, she said. Who to believe? We’ll call in the ultimate judge, the market:

The author may hold a position in the securities discussed. A current list of the author's holdings is available here.

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