Larry Ellison, the CEO of Oracle
So Ellison, it could be argued, now needs another enemy. Why not SAP
Ellison should be concerned about SAP, especially in light of yesterday's earnings report. In the fourth quarter, SAP posted net income of $708 million, which was up from $548 million in the same quarter a year ago. For 2004, software revenues increased 10% to $3.2 billion, and the company expects the growth to increase to as much as 12% in 2005.
Moreover, SAP demonstrated its strongest growth in the U.S. Those revenues increased 27% in 2004 to $816 million. So, maybe SAP is already winning early battles for disaffected PeopleSoft customers. For example, during the quarter, SAP's U.S. market share increased 1% to 38%.
Despite the strong performance, SAP's stock price slid $0.92 to $39.38. On the conference call, SAP's CEO, Henning Kagermann, indicated that 2005 will be a time for investment for his company. A big part of this will be the hiring of 3,000 additional employees. This may crimp profits in the short term, but with the upcoming battle with Ellison, it is the smart thing to do.
Fool contributor Tom Taulli does not own shares mentioned in this article.