Shares of SAP AG (SAP) are down $3.54, or 4.3%, at $78.34, after the company this morning reported preliminary Q4 results that surpassed its own projections but missed consensus estimates.
Revenue in the three months ending in December is estimated to have been �5.02 billion, up 9% on an IFRS basis (the equivalent of U.S. GAAP), and �5.06 billion on a non-IFRS basis. Operating profit came in at �1.59 billion, or �1.96 billion on a non-IFRS basis.
Analysts had been estimating �5.13 billion and �1.95 billion, in non-IFRS terms, respectively.
Nomura Equity Research’s Rick Sherlund, who has a Buy rating on the ordinary shares, and a �68 price target, this morning points out that software license revenue of �1.94 billion was better than the �1.92 billion he had been projecting, while “software and software-related services” revenue of �4.27 billion was below his �4.3 billion estimate.
Sherlund notes, too, that the company’s “Hana” in-memory database product had a “good quarter,” with revenue of �194 million, a lot more than the �140 million he had been projecting. SAP has been selling the database to some accounts in competition with�Oracle�(ORCL).
Growth was good in Asia Pacific, he notes, at 22%, but an “incrementally challenging environment in the U.S.”
Sherlund expects the company to issue its outlook when it reports full results on January 23rd. He thinks the main issue at the moment is how much the company can invest in its products for cloud computing and hosted applications:
We believe that there may be some conflict internally over the appropriate level of investment in the newly acquires SaaS businesses, having to balance its own margin targets against the desire to spend aggressively from its SaaS properties. We have modeled 50bps of margin expansion in 2103, below the Street at 80bps, to try and reflect what may be a desire to spend more heavily near term. SAP has an easy year-over-year comparison upcoming in Q1 and more challenging comparison for Q2 and Q3.
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