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InvestorGuide Stock Analysis

SAP's $6.8 Billion Acquisition - Foolish or Wise?
Excerpt from the InvestorGuide.com Stock of the Day on 10/8/2007

In the field of business-management software, there is a lot of competition, from well known companies such as Microsoft (MSFT: Charts, News, Offers) and Oracle (ORCL: Charts, News, Offers). Lesser known in the United States is Germany-based SAP AG, the third largest software company in the world. SAP is making headlines as it announced yesterday that they will be acquiring France-based Business Objects (BOBJ: Charts, News, Offers) for $6.8 billion. On the one hand, this seems like a strategic move for SAP that should help them battle against their strong competitors, but on the other hand, this move has actually led to a drop in SAP's stock price. What has caused SAP investors to be worried, and will SAP be able to profit from this big acquisition?

In 2005, SAP announced that their desire was to double their customer base over the next five years. In most cases, a company needs to undergo some changes in order to increase their profitability, and up until now SAP has chosen to focus on organic change, improving their business internally, rather than on major acquisitions (although it has acquired a few smaller companies in the past year). This changed when SAP announced their acquisition of Business Objects, a significant purchase at $6.8 billion. Many analysts suggest this SAP may have been influenced to acquire a company after hearing of Oracle's recent acquisitions, which included Business Objects' main competitor, Hyperion Solutions. In a press conference today, SAP's CEO has denied this analysis, saying that "It's not a reaction because we can't see that Oracle is gaining market share." More >

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Morningstar Analysis for SAP Aktiengesellschaft Systeme, Anwendungen, Produkte

SAP Aktiengesellschaft Systeme, Anwendungen, Produkte (SAP) Upgrades

Date
Analyst
Old Rating
New Rating
07/30/2009
SocGen
Sell
Hold
07/09/2009
Bank of America
Neutral
Buy
07/08/2009
Jefferies & Co
Hold
Buy
01/13/2009
Merrill Lynch
Neutral
Buy
09/16/2008
Credit Suisse
Neutral
Outperform
07/29/2008
Jefferies & Co
Hold
Buy

SAP Aktiengesellschaft Systeme, Anwendungen, Produkte (SAP) Downgrades

Date
Analyst
Old Rating
New Rating
06/10/2009
Bank of America
Buy
Neutral
12/12/2008
Jefferies & Co.
Buy
Hold
11/26/2008
Societe General
Hold
Sell
11/17/2008
Merrill Lynch
Buy
Neutral
10/14/2008
Deutsche Bank
Buy
Hold
12/12/2007
Credit Suisse
Outperform
Underperform

SAP Aktiengesellschaft Systeme, Anwendungen, Produkte (SAP) New Coverage

Date
Analyst
Rating
03/23/2009
Broadpoint AmTech
Sell
02/19/2009
HSBC
Neutral
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SAP Links

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Competitor Analysis

SAP Aktiengesellschaft Systeme, Anwendungen, Produkte
Oracle
Microsoft
Siemens AG
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