One of the things that I have found worrisome is that the company has maintained the same guidance for months for full-year revenues and no one has wanted to listen, it seems. If the ERP companies' growth was stimulated by large, early adopters that wanted to circumvent Y2K remediation, then that growth was above trendline. As Sanjay Kumar of CA noted last week, these customers are busy implementing their installations before buying more. Meanwhile, the window has been closing for other large companies to do the same in dealing with Y2K. Takes too long.
So Baan, PeopleSoft, Oracle,and SAP have had to turn to the "middle market" with "light" versions of their ERP products. This is a different marketplace with different competitive characteristics. Expect earnings to be below trend for a while now.
On the conference call, SAP *said* not to expect large customers who are *on time* with their Year 2000 remediation efforts to turn their attention again to other major IT projects until mid-1999.
Long term, this is one hell of a company. The next several quarters are likely to prove very difficult as expectations continue to ratchet down. There is more pain ahead, especially if we are facing recession. |
