) to neutral from buy.
Analyst Michael Briest says while he's optimistic that Business Objects will meet or exceed his fourth-quarter estimates, he thinks a slow start to trading may be seen in the first half of 2004. Briest cites costs, product risks, personnel, and salesforce integration in the first half of the year. Also, he cites less developed cross-selling capabilities, the likely impact of a $30-million deferred income write-down, and more intense competition in the enterprise-reporting market.
Briest thinks Business Objects will likely set its guidance cautiously. He expects the first quarter to generate 15% of his $1.20 earnings per share estimate for 2004, and thinks the fourth quarter should account for 40%. Briest says poor linearity and execution risks are unlikely to make Business Objects a sector outperformer.