The database-software giant reported a preliminary 3% drop in software revenues in the fourth quarter. Analyst Peter Coleman says SAP's license revenue is solid, but not exceptional, due to the impact of foreign exchange. He believes some investors may have been looking for stronger license revenue, hence taking profits.
He says the news doesn't say what's going on with costs, an area SAP has done good job in managing. Once again, SAP is seeing Germany sales very strong; the company is becoming a great recovery play in Europe.
Coleman expects SAP to continue to do very well in the U.S.; couple that with upside in Europe, the story becomes very interesting in 2004. He sees 43 cents fourth-quarter earnings per American Depositary Receipt, and $1.24 in 2004. He has a $50 target.