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October 12, 1998

SHARE PRICE CRASHES AS BAAN OPENS SHOWCASE CONFERENCE

By CBR Staff Writer

Dutch ERP software outfit Baan Co NV could hardly have made a worse start to its Baan World Europe 98 showcase conference when it announced a profits warning. It promptly saw its shares plunge 30% to 22.30 guilders, the lowest level since April 1996. The markets also pushed up shares of Baan’s rival and leading ERP player SAP AG by 7%. Last week SAP reported that third quarter sales were up 43%. The Baan news makes the SAP results look even better, one trader said. Baan’s excuses for its poor performance are global economic conditions and market volatility, and re- allocation of customers’ IT budgets to fix Year 2000 problems – all difficulties that SAP had to grapple with. Baan said it had been hit by decreased software expenditure, notably in the United States. In consequence, Baan says 24 to 26 transactions with large organizations were deferred in the quarter. For the first nine months, Baan expects revenues to show a 30% increase to around $600m while the third quarter is likely to show revenues in the $190m to $195m range, compared with $173.2m in the same period last year. What rattled the market however was a forecast loss for the third quarter of between $0.13 to $0.16 per share. One consolation is that Baan expects to report a record number of 500 license sales transactions in the third quarter compared with 450 in the previous three months.

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