When Germany's SAP (NYSE:SAP) yesterday reported that a worsening financial crisis had torpedoed its expectations for third-quarter revenue, investors fled for the door and trampled Oracle (NASDAQ:ORCL) on the way out. SAP fell 13%, Oracle 6%.
So that's how it is now? Shoot the messenger and his sworn enemy? Call it road rage for the investor class. Or maybe Joe Oddlot's Revenge. But whatever you call it, don't call it fair. Oracle is the superior stock, according to the 115,000-plus members in our Motley Fool CAPS investor-intelligence database:
|
Metric | ||
|---|---|---|
|
CAPS stars (out of 5) |
*** |
**** |
|
Total ratings |
274 |
2,395 |
|
Bullish ratings |
227 |
2,228 |
|
Percent Bulls |
82.8% |
93% |
|
Bearish ratings |
47 |
167 |
|
Percent Bears |
17.2% |
7% |
|
Bullish pitches |
30 |
291 |
|
Bearish pitches |
12 |
34 |
Data current as of Oct. 6, 2008.
Individuals disagree, of course. CAPS investor scuter69 called Oracle a "market leader" in mid-September. "As technology rotates back into a leadership role in the next two quarters, this company will lead the way," our Fool wrote. Investor rrctwaits countered last week by arguing that SAP would "sap" Oracle's market "with a better product, and FAR better customer service."
Both arguments make sense. Oracle is tops in database market share, but the company has been criticized in the past for making its profits via aggressive sales tactics and oppressive maintenance fees.
So what really sets these two apart? Growth. Oracle has had a lot more of it:
|
Revenue Growth |
SAP |
Oracle |
|---|---|---|
|
Trailing 12 months |
12.7% |
22.7% |
|
3-year average |
11.5% |
23.4% |
|
5-year average |
9% |
19.5% |
Sources: Motley Fool CAPS, Yahoo! Finance.
Even so, the database deacon could suffer from strapped customers; SAP is going through this, and IBM (NYSE:IBM) is rumored to be, too. Then again, so could every one of Oracle's peers, including NetApp (NASDAQ:NTAP), Red Hat (NYSE:RHT), and Microsoft (NASDAQ:MSFT).
In a statement, SAP chief executive Henning Kagermann talked in broad terms about what's ailing his company:
The market developments of the past several weeks have been dramatic and worrying to many businesses. These concerns triggered a very sudden and unexpected drop in business activity at the end of the quarter. Unfortunately, SAP was not immune from the economic and financial crisis that has enveloped the markets in the second half of September, causing us to report numbers below our expectations.
How much below is still to be determined. All we know for sure is that management expects between 1.97 billion and 1.98 billion euros, or about $2.66 billion to $2.67 billion, in third-quarter revenue, up roughly 13% over last year. Not bad, but well below the 24% to 27% growth SAP was expecting as of July, the Associated Press reports.
That's probably worth a sell-off in SAP. But it's pure panic to assume that Oracle, known for outperforming its peer, will suffer similarly or as much.
Get your clicks with related Foolishness:
- Larry Ellison isn't tilting at windmills again, is he?
- You might want SAP on your short list.
- Oracle blew the market away last month.
