SAP Can Get Its Groove Back with 'Limitless' China?

Posted Sep 3rd 2010 11:30AM by Tom Taulli
Filed under: Technology

For the past few years, the shares of SAP (SAP) have had little direction. While the company has solid cash flows and a massive customer base, the growth ramp has stalled. Of course, SAP is not alone. Other tech giants like Cisco (CSCO), Intel (INTC) and Microsoft (MSFT) have faced the same problem.

Yet, according to Bloomberg.com, SAP thinks it can rev things up again. How? Yes, the opportunity is China.

It does make a lot of sense, actually. While China continues to grow, there are some big challenges. Many companies are family operated and have antiquated infrastructures. In other words, there should be a surge in demand for enterprise resource planning software.

Interestingly enough, SAP says that its acquisition of Sybase will be critical. After all, CEO John Chen has built a strong business in China. What's more, SAP plans to invest heavily in research centers and distribution points in the country. It certainly helps that the company has a large amount of cash.

However, it's going to take time to get momentum. Also, SAP has proven to be slow moving.

So investors need to be wary. If anything, the growth opportunities are still with the cloud-computing operators, such as NetSuite (N).

Tom Taulli is also the author of several books, including the Complete M&A Handbook as well as the upcoming book, All About Short Selling.

Tags: China, CSCO, INTC, Intel, inthenews, John Chen, Microsoft, Netsuite, SAP