SAP overhypes earnings. Playing Jedi mind tricks or maybe I just need a cigarette
George is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
SAP (NYSE: SAP) issued preliminary Q4 and year end numbers. The hyperbole in the headlines was amazing. Just in case investors cannot read management threw in these headlines:
- SAP Reports Best Ever Results
- Best Ever Software Revenue Performance
- Exceeding Revenue Guidance
- Exceeding Operating Profit Guidance
- Double-Digit Earnings Per Share Growth
- Record Operating Cash Flow
- Strong Contribution From Innovations
Is it just me or do we all need a cigarette.
OK the enterprise software business is doing well. This thing called the cloud is so sexy all major and minor companies will spend billions to upgrade to that they can be in the cloud. If you are a SAP investor or an Oracle (NASDAQ: ORCL) investor you already know that.
As always read very closely. go to the numbers and follow the comparisons. Last year Q4 they took a hit on something called TomorrowNow for 934 million Euro's. It became their single largest expense item outweighing any other major category.
All financial commentary neglects to point out the differential. SAP management wants you to look the other way.
George Gutowski writes from a caveat emptor perspective.