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

To: Doug who wrote (3038)	2/2/1999 11:09:00 AM
From: Jay Rommel	Read Replies (2) \| Respond to of 3424

> At what price do you consider SAP is a BUY & how long for a turn around. If this stock hits 20 the trailing 12 months p/e would be 50. Will we ever hit 20? I don't believe so ... I am of the opinion that the turnaround will be sooner than later. I am positive we (on this thread) are not the only people on the planet watching this sector.

To: Doug who wrote (3038)	2/2/1999 2:00:00 PM
From: Jay Rommel	Read Replies (1) \| Respond to of 3424

Correction, Here is summary Salomon latest research report on SAP: --SUMMARY:--SAP A.G.--Server & Enterprise Software We are lowering earnings estimates and downgrading the stock to an Outperform from a Buy With the stock off about 30% (and more than 50% from its highs), we do not believe that it is prudent to go to a neutral rating as the company continues to gain market share from competitors and is truly the gorilla of its market. Although the next two quarters are likely to be challenging, we believe that the long term fundamentals remain in place and that longer term oriented investors will be rewarded by withstanding the near-term negative currents. Using a price/earnings multiple of 40 times our new estimate of $.80 in 2000* yields a price target of $32 per share (was $47). EARNINGS:------------------------------------------------------------- FYE 1 Qtr 2 Qtr 3 Qtr 4 Qtr Year Actual 12/97 EPS $0.05A $0.10A $0.08A $0.19A $0.41A Previous 12/98 EPS $0.08A $0.13A $0.10A $0.27E $0.57E Current 12/98 EPS $0.08A $0.13A $0.10A $0.19E $0.50E Previous 12/99 EPS $N/A $N/A $N/A $N/A $0.83E Current 12/99 EPS $N/A $N/A $N/A $N/A $0.65E Previous 12/00 EPS $N/A $N/A $N/A $N/A $N/A Current 12/00 EPS $N/A $N/A $N/A $N/A $0.80E Footnotes: EPS are fully diluted. --FUNDAMENTALS:------------------------------------------------------------- Current Rank........:2-H Price 01/04/99......:$34.56 Prior Rank..........:1-M Target Price........:$32.00 P/E 12/98...........:69.1X 52 Wk Price Range...:61.36 - 25.72 P/E 12/99...........:53.2X Proj. 5yr EPS Grth..:25.0% Return on Equity 97.:30.30% BookValue...........:$6.00 LT Debt-to-Capital..:.43% Dividend............:$.40 Revenue 1998........:$5046.90 mil Yield...............:1.1% Shares Outstanding..:1248.00 mil Convertible.........:No Mkt. Capitalization.:$43130.88 mil Hedge Clause(s).....:# Comments............: --OPINION:------------------------------------------------------------------ SAP preannounced disappointing fourth quarter earnings this morning. Downgrade to outperform 1) SAP preannounced disappointing fourth quarter earnings. We are lowering our earnings estimates and downgrading the stock to outperform 2) With the stock off about 30% (and more than 50% from its highs), we do not believe that it is prudent to go to a neutral rating as the company continues to gain market share from competitors and is truly the gorilla of its market. 3) Although the next two quarters are likely to be challenging, we believe that the long term fundamentals remain in place and that longer term oriented investors will be rewarded by withstanding the near-term negative currents. 4) Using a price/earnings multiple of 40 times our new estimate of $.80 in 2000 yields a price target of $32 per share. I mistakenly took the 40 as earnings estimates and calculated 20 (shr price) * .40 = 50 (p/e). BTW, I also read the H & Q report and they mirror the report from Salomon.