FBR Capital on Technology, Media & Telecom: Enterprise Software Exposure to Japan and APAC: Who Is Affected?
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Rating Summary:
23 Buy, 30 Hold, 6 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
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FBR Capital on Technology, Media & Telecom: Enterprise Software Exposure to Japan and APAC: Who Is Affected?
FBR analyst says, "Last week’s tragic earthquake and tsunami in northern Japan and its aftermath (nuclear reactor crisis) present a near-term disruption for a handful of software companies that have exposure to the region. Japan is the third-largest economy in the world and one of the largest trading partners of the U.S. At this point, we do not believe the impact will be disproportionately material to our universe, but we highlight the exposure across our covered companies and highlight those that particularly need to be monitored. In our software coverage, we highlight the exposure of Adobe Systems (Nasdaq: ADBE), Salesforce.com (NYSE: CRM), and Concur Technologies (Nasdaq: CNQR) to the region. We also would expect some March-quarter deals in Japan to be delayed as companies evaluate the impact of the earthquake on their businesses, which would have a near-term impact on the traditional software license models of SAP (NYSE: SAP) and Oracle (Nasdaq: ORCL). SAP would be more impacted in the near term as it has a March-quarter close compared to February for Oracle. We note that many Japanese companies have fiscal years that end in March, so there is the risk that budgets may not see the usual year-end flush."
Adobe Systems. Japan represents Adobe's second-largest market. Adobe generates 20% of its revenues from Asia-Pacific and approximately 10% to 15% of its revenues from Japan...Since the earthquake occurred in March, we do not expect any impact on F1Q11 (February), the results of which will be reported next week. However, we think the company’s guidance will likely be negatively impacted as the company takes the impact of the earthquake and its aftermath into consideration.
Salesforce.com. Asia-Pacific accounted for 14% of Salesforce.com's revenues in FY11 (CY10) and was the company’s fastest-growing region (54% growth in FY11). Japan is the largest component of Salesforce.com’s Asia-Pacific exposure. We estimate Japan accounts for approximately 8% to 9% of total revenues.
Concur. Concur’s exposure to Asia-Pacific is not significant as the region accounts for less than 5% of the company’s revenues (business originated from APAC companies). However, we think the company may be impacted in the near term by a disruption of business travel to Japan from its non-Japanese multinational customers.
SAP and Oracle. While the exposure of SAP and Oracle to Asia-Pacific and Japan are generally in line with that of overall worldwide IT spending, we think their traditional license models leaves them susceptible to deal slippages in the region in the near term. We think the risk is more immediate for SAP as it has a March quarter end.
FBR analyst says, "Last week’s tragic earthquake and tsunami in northern Japan and its aftermath (nuclear reactor crisis) present a near-term disruption for a handful of software companies that have exposure to the region. Japan is the third-largest economy in the world and one of the largest trading partners of the U.S. At this point, we do not believe the impact will be disproportionately material to our universe, but we highlight the exposure across our covered companies and highlight those that particularly need to be monitored. In our software coverage, we highlight the exposure of Adobe Systems (Nasdaq: ADBE), Salesforce.com (NYSE: CRM), and Concur Technologies (Nasdaq: CNQR) to the region. We also would expect some March-quarter deals in Japan to be delayed as companies evaluate the impact of the earthquake on their businesses, which would have a near-term impact on the traditional software license models of SAP (NYSE: SAP) and Oracle (Nasdaq: ORCL). SAP would be more impacted in the near term as it has a March-quarter close compared to February for Oracle. We note that many Japanese companies have fiscal years that end in March, so there is the risk that budgets may not see the usual year-end flush."
Adobe Systems. Japan represents Adobe's second-largest market. Adobe generates 20% of its revenues from Asia-Pacific and approximately 10% to 15% of its revenues from Japan...Since the earthquake occurred in March, we do not expect any impact on F1Q11 (February), the results of which will be reported next week. However, we think the company’s guidance will likely be negatively impacted as the company takes the impact of the earthquake and its aftermath into consideration.
Salesforce.com. Asia-Pacific accounted for 14% of Salesforce.com's revenues in FY11 (CY10) and was the company’s fastest-growing region (54% growth in FY11). Japan is the largest component of Salesforce.com’s Asia-Pacific exposure. We estimate Japan accounts for approximately 8% to 9% of total revenues.
Concur. Concur’s exposure to Asia-Pacific is not significant as the region accounts for less than 5% of the company’s revenues (business originated from APAC companies). However, we think the company may be impacted in the near term by a disruption of business travel to Japan from its non-Japanese multinational customers.
SAP and Oracle. While the exposure of SAP and Oracle to Asia-Pacific and Japan are generally in line with that of overall worldwide IT spending, we think their traditional license models leaves them susceptible to deal slippages in the region in the near term. We think the risk is more immediate for SAP as it has a March quarter end.
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