Oracle, SAP Outlooks Lift Software Sector

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Shares of Oracle jumped more than 6 percent Wednesday, a day after the world's No. 2 software maker made upbeat comments about the business environment and rival German giant SAP AG raised its outlook for the quarter.

Oracle, seen as a bellwether for the strength of corporate spending on large technology projects, saw its shares climb 6.22 percent, or 98 cents to $16.73 on the Nasdaq, where the stock was the most actively traded.

"The huge positive news out of SAP is helping Oracle and the whole software sector," said Brendan Barnicle, an analyst with Pacific Crest Securities.

Positive comments made by Oracle's management during a Morgan Stanley technology conference Tuesday also helped boost the stock, Barnicle said.

"I understand their tone was even more bullish in private meetings than it was in their public presentation," Barnicle said, referring to Chief Financial Officer Jeff Henley's comments that the worst was over and the environment was starting to improve.

In addition, a slew of analyst upgrades on big software firms, positive comments from Microsoft at a Sanford Bernstein conference and upbeat remarks from systems integration firm Accenture Ltd., whose business revolves around company software installations, all helped boost Oracle's stock, Barnicle said.

"You've had a slew of various data points in software that are really positive and helping to drive the sector," Barnicle said.

Thomas Weisel Partners Wednesday also said it upgraded Oracle's stock rating to "buy" from "market perform" based on the company's positive outlook.

Nevertheless, there were dissenting voices.

A.G. Edwards and Sons analyst Mary O'Rourke Werner downgraded the shares to "hold" from "buy" saying that the positive news already is built into the stock price.

Oracle's stock -- which has lost about 52 percent of its value in the last 12 months -- is up 14 percent so far this year.

"We feel this run up is based on some evidence and excitement that we are at a turning point, but we do not feel the growth and value created by this turnaround and expected continued improvement throughout 2002 is enough to warrant purchasing at current prices," she wrote.

But the big news was SAP, analysts said.

"The view is if SAP and the other applications companies are selling that much more software, then companies need to run it on a database, and they usually run it on Oracle," said Chuck Phillips, Morgan Stanley's influential software analyst.

Earlier Wednesday, SAP, Europe's largest business software maker and one of Oracle's closest competitors, surprised the market by pre-announcing positive fourth-quarter results which showed software sales had risen faster than analysts had expected.

Having been hit hard by the U.S economic slump during its third quarter, SAP said software sales exceeded one billion euros ($891.3 million) in the fourth quarter, above analyst forecasts of 781 million euros, according to a Reuters poll.

In the U.S SAP's shares gained 9.69 percent, or $3.22 to $36.44 on the news, pulling its competitors, including Oracle, along with it.

Siebel Systems , which competes with SAP in the customer relationship management market, was up 3.78 percent at $34.56. PeopleSoft gained 1.01 percent to finish at $40.90. i2 Technologies rose 4.09 percent to $9.16.


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