Oracle Shines Brighter Than SAP

Making the competition more tense, SAP AG (NYSE:SAP) fell short of expectations in the last quarter, upsetting shareholders, while Oracle (NASDAQ:ORCL) appeared to perform a bit better.

SAP had been forecast to earn a group revenue of 5.17 billion euros in the last quarter, but its posted results fell slightly below the prediction with 5.06 billion euros — about $6.8 billion USD — in revenue, which is a 12 percent rise.

Oracle, on the other hand, performed well, with a 17 percent increase in software revenue for the quarter. Being SAP’s biggest competitor and the world’s number-three software maker, Oracle’s strong numbers cast a dark shadow on SAP’s middling success. Further improving Oracle’s position in the competition, the company forecast strong sales for 2013…

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In addition to falling behind predictions, SAP’s operating margin narrowed by 0.8 percentage points to 38.8 percent last quarter. The shift is a result of their operating profit rising 10 percent, slower than revenue, to 1.96 billion euros. Now, SAP is expected to post a more disappointing outlook for 2013 when it releases its full summary for 2012 later this month.

SAP’s number may have been affected by the $7.7 billion it spent to buy web-based computing companies Ariba and SuccessFactors. Cloud technologies were expected to help companies fare the economic downturn as they require less upfront costs for licenses, hardware, and installation. However, SAP’s web-based services only brought in 342 million euros in revenue of a total 16.3 billion euros in 2012. If the market for cloud-based technologies and services continues to grow, SAP may be able to gain back the favor of shareholders and improve its performance.

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