By Geoffrey Smith
Investing.com – The Elliott Effect just hit SAP (DE:).
The B2B software provider is at the top of the early trading on Wednesday, after Paul Singer's Elliott Management reported it has accumulated a $ 1.3 trillion stake in the company via stock and derivatives.
Normally, that could have seen Germany's most valuable company for a potentially abusive battle with one of Wall Street's most aggressive activist investors. However, SAP appears to have pre-empted a head-on clash by announcing new targets for profit margins and stock repurchases. They're designed to assure investors who have been unsettled by recent high-profile departures and by uncertain progress in their core software business to a cloud-based subscription model.
The new targets more than made up for a quarterly loss caused by restructuring charges and other items related to SAP's expensive-looking $ 8 billion acquisition of Qualtrics last year. Underlying earnings rose at more than expected, while operating margins from its cloud-based business also improved.
The shares rose as much as 7% to a new Early trading in early trading and up 6.6% as of 04:30 AM ET (0830 GMT)
SAP was one of two reasons Germany was alone in the green early Wednesday, on a day when profit taking kicked in across Asian and European markets after Wall Street hit new record highs on Tuesday. The benchmark was down 0.46 points, or 0.1
The other reason for the Dax's outperformance was payments processor Wirecard (DE :), which rose over 7% after Japan's venture capital giant Softbank announced a $ 1 billion investment. This is a huge vote of confidence in a company that has been plagued by allegations of false accounting – allegations that it has repeatedly denied.
Credit Suisse (SIX 🙂 rose 2.6% after reporting and 8% increase in net profit in the quarter, while chipmaker STMicroelectronics (PA 🙂 rose 3.1% after beating expectations. Pharma giant Novartis (SIX 🙂 also rose 2.7% as it raised its full-year guidance for core operating profit after a strong first quarter. U.K fast-fashion group boohoo.com (LON 🙂 also rose 3.8% after announcing a sharp rise in full-year sales and improved profit margins.
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