SAP SE (SAP) recently acquired the major cloud-based travel and expense management company, Concur Technologies, in order to enhance its transition to cloud business.
The decision to acquire Concur comes as a strategic move on part of SAP, as the combined group will now have access to over 50 million users in the cloud, which is more than any enterprise cloud company. Further, in terms of revenue, the merged entity will henceforth become the second largest cloud company.
The deal has expanded SAP’s network over the $1.2 trillion corporate travel spectrum, while strengthening its foothold in the market for network-based, context-aware mobile applications. Catalyzing one of the largest business networks, the combined resources of the two entities are expected to generate annual transaction volumes of more than $600 billion.
As of present, SAP has been receiving a major portion of its revenues from on-premise products. However, the ongoing shift toward cloud-based technology comes with a clouded vision of the future as well. This apart, costs of transition are likely to weigh on the company’s margins, as indicated by downward revision of fiscal 2014 guidance for operating profit to a range of €5.6 – €5.8 billion at constant currency, compared with the previous range of €5.8 – €6.0 billion.
Only time will tell that whether the latest move will eventually benefit this Zacks Rank #2 (Buy) stock. A deeper insight on SAP can be obtained from our most recent research report issued on Dec 26, 2014.
Stocks That Warrant a Look
Better-ranked stocks in the industry include Blount Callidus Software Inc. (CALD), Nuance Communications, Inc. (NUAN) and Smith Micro Software Inc. (SMSI), all three sporting a Zacks Rank #1 (Strong Buy).
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