Japan quake could dampen enterprise software business

March 21st, 2011 | by Aaron Tan

The March 11 earthquake in Japan could dampen business for SAP, Oracle, Adobe and Salesforce.com in the world’s third largest economy, according to FBR Capital Markets.

The tragic earthquake and tsunami in northern Japan and its nuclear reactor crisis present a “near-term disruption” for a handful of software companies that are exposed to the Asia-Pacific region, analysts at the financial analyst firm said in a note to clients.

“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.”

Some March-quarter deals in Japan are expected to be delayed as companies evaluate the impact of the earthquake on their businesses. SAP, however, would be more affected in the near term as it has a March-quarter closure compared to February for Oracle.

While the exposure of SAP and Oracle to Asia-Pacific and Japan is generally in line with that of overall worldwide IT spending, the analysts said the traditional licensing models of the two enterprise software giants will leave them “susceptible to deal slippages”.

Adobe, which earns 10% to 15% of its revenues from Japan, will also be negatively affected as the company considers the impact of the earthquake and its aftermath in its financial guidance. The earthquake is also likely to affect Salesforce.com, which earns 8% to 9% of its total revenues from Japan.

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