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Technology Stocks : SAP A.G. -- Ignore unavailable to you. Want to Upgrade?

To: AMF who wrote (424)	2/6/1998 10:41:00 AM
From: TCGNJ	Respond to of 3424

From Lehman site: lehman.com TCG ----------------------------------------------------------- Headline: SAP AG: Orderly Transition of Management Underway Author: Brian E. Skiba 1(415)274-5360 Rating: 2 Company: SAPHY Country: COM CUS Industry: DATAPR Ticker : SAPHY Rank(Prev): 2-Outperform Rank(Curr): 2-Outperform Price : $127 52wk Range: $128-42 Price Target: $NA Today's Date : 02/05/98 Fiscal Year : DEC ------------------------------------------------------------------------------ EPS 1997 1998 1999 2000 QTR. Actual Prev. Curr. Prev. Curr. Prev. Curr. 1st: 0.19A - -E - -E - -E - -E - -E - -E 2nd: 0.42A - -E - -E - -E - -E - -E - -E 3rd: - -A - -E - -E - -E - -E - -E - -E 4th: - -A - -E - -E - -E - -E - -E - -E ------------------------------------------------------------------------------ Year:$ 1.67A $ 2.31E $ 2.31E $ 3.03E $ 3.03E $ - -E $ - -E Street Est.: $ 2.07E $ 2.06E $ - -E $ - -E $ - -E $ - -E ------------------------------------------------------------------------------ Price (As of 1/05): $127.00 Revenue (1998): DM 8.3 Bil. Return On Equity (97): N/A Proj. 5yr EPS Grth: 29.0 % Shares Outstanding: 312.9 Mil. Dividend Yield: N/A Mkt Capitalization: 39.74 Bil. P/E 1998; 1999 : 54.9 X; 41.9 X Current Book Value: N/A Convertible: - -Debt- to-Capital: N/M Disclosure(s): C ------------------------------------------------------------------------------ * Dietmar Hopp, co-founder and co-chairman of SAP AG will tender his resignation on May 7th and will seek the chairman position on the Supervisory board of the company. Hopp, now 57, was one of 4 founders of the company and has been with it 25+ years. Klaus Tschira, also a co-founder and 57, will be stepping down from the executive board and joining the supervisory board. * Henning Kagermann, an SAP employee since 1982 and member of the executive board, will take on the role of co-chairman of the executive board. Kagermann has been actively involved in communicating with the investment community over the past several years. * We reiterate our 2-Outperform rating on the stock. The management transition was expected, orderly, planned and beneficial for the company. We do not expect any significant share selling on the part of the founders with his move. ------------------------------------------------------------------------------ CHANGES IN MANAGEMENT SAP announced that Dietmar Hopp, co-founder and co-chairman of the executive board, will be resigning from that position on May 7th and will be replaced by Henning Kagermann. Kagermann, age 50, has been with SAP since 1982, and has been responsible for SAP's financial products and various operating regions globally. Kagermann has been actively involved in dialogue with the financial community; he was the guest host of the quarterly conference calls. Several important things to note: 1) Hopp will not be retiring, but transitioning from a relatively day-to-day executive board role to the chairman of the supervisory board (pending a vote, but with the 3 remaining founders controlling 66% of the voting rights, we don't see this as a problem). According to company management, he expects to continue his work as an active participant of the supervisory board . 2) We do not expect Hopp to liquidate his ownership position. In 1996, when Hector, the 4th founder of SAP resigned, he liquidated his position. SUMMARY We believe this will be an orderly transition in management at SAP. The founders of SAP AG have been with the company for 25 years and some transition is naturally, particularly as these founders approach 60 years old. In our opinion, the company has a deep bench of management talent. If the stock experiences some downward pressure due to concerns related to this transition, we would use it as a buying opportunity for those with a long-term perspective. We reiterate our 2-Outperform rating and target price of US $136 on the ADR SAPHY. BUSINESS DESCRIPTION: SAP is the worlds largest provider of client/server enterprise software solutions. SAP's R/3 product provides financials/accounting, human resource logistics, suppy chain mangement and e-commerce. ------------------------------------------------------------------------------ Disclosure Legend: A-Lehman Brothers Inc. managed or co-managed within the past three years a public offering of securities for this company. B-An employee of Lehman Brothers Inc. is a director of this company. C-Lehman Brothers Inc. makes a market in the securities of this company. G-The Lehman Brothers analyst who covers this company also has position in its securities.