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SAP misses target, in large part due to foreign exchange!

"SAP misses target, in large part due to foreign exchange. Result: 10 percent decrease in share price and USD 6 Billion in market cap loss!"

Some think it is ironic that the large ERP Company missed earnings due to FX. Prof FiREapps is not surprised. Why?

1) SAP is  just like any corporation that does not have a well defined process in place. I could tell from their financials that they had the risk and it was only a matter of time. 

2) ERPs like SAP are designed to focus on history and make that data available for analysis and decision making.

3) The recent increase in volatility will hurt many more corporations. They will surprise investors and themselves resulting in significant impact on the share price.

4) If one believes that they should know - as they are closer to the source than others; I can only non- scientifically say: "the hairdresser always has the worst haircut" :-)

Don't forget: foreign exchange volatility and surprises will not get a free pass any longer. SAP is just the latest proof for that.

Should you be interested in the SAP analysis and possible process change, please let me know. Given the level of interest, a detailed research piece could follow.

Also I am curious about the follwing:

1) Are you surprised that SAP missed their numbers due to FX?

  1. YES
  2. NO
  3. Never thought about it

2) Does it surprise you that a USD 30 mil loss reduced the market capitalization of SAP by more than USD 6 Billion?

  1. YES
  2. NO

3) Did you know that Google had the exact same thing happen roughly 6 months ago? (They lost 8% due to FX losses).

  1. YES
  2. NO, I did not know surprise, but that does not surprise me
  3. NO, I did not know and I am surprised

4) (Optional) Do you think your company could have the same surprise sometime in the future

  • a. YES
  • b. NO

 

Published Jan 15 2007, 06:34 PM by Sunny

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