Subdued sentiment on European and U.S. equity markets
The positive sentiment in the equity markets that was observed in the first
quarter, continued into the month of April. M&A speculation in all
sectors and strong economic growth in the U.S. and China helped ensure
stable price trends in all markets. In addition, the first quarter results
were encouraging, especially for DAX companies. In May, however,
sentiment on the stock exchanges began weakening. This situation
was exacerbated in mid-May by concerns over inflation and interest
rates in the U.S. based on statements by the U.S. Federal Reserve,
inflation figures for the U.S. as well as the dispute with Iran over
nuclear energy and the resulting increase in the price of oil, which
led to significant declines in share prices. The U.S. technology
index NASDAQ 100 suffered a loss of 7.7 percent and closed at
1,575 at the end of the second quarter.
Due to these events the technology companies listed in the TecDAX came under
pressure. The TecDAX opened the second quarter
at 727, falling below 600 in mid June though recovering somewhat
to close at 652 on June 30. At the end of the second quarter, the
TecDAX had stabilized thanks to positive reports from the solar
industry. The German Association for the Solar Industry
(Bundesverband Solarwirtschaft) recently announced the creation
of more than 5,000 new jobs this year. The outlook
for the IT industry also looks promising. For example, the German
government is predicting that the German IT industry will
increasingly drive the economy.
Software AG stock follows TecDAX
In the second quarter, our stock performed in line with the TecDAX, which
fell by 10.3 percent during this period. After peaking at €46.02 at
the beginning of May, Software AG‘s share price dropped by 10.1
percent by the end the second quarter to close at €40.68 in Xetra
electronic trading on June 30, 2006.
The Software AG stock improved slightly in the TecDAX ranking of
Deutsche Börse AG, reaching 7th place (Q1 2006: 8th place) in
market capitalization and 10th place (Q1 2006: 10th place) in
trading volume as of the end of June 2006.
Investor relations activities intensified in the U.S.
Now that the Software AG stock is once again receiving attention from
mid-cap and large-cap investors due to our rapidly growing market
capitalization, investor relations activities in 2006 are particularly
focused on the U.S. However, our efforts in this region were
complicated by weak European equity markets, which unsettled U.S.
investors. In order to minimize risk, investors tended to hold
blue chips and sell small caps, particularly technology stocks.
On the whole, investors were reluctant to make new investments.
We will nevertheless maintain our investor relations activities
in order to build up relationships until the investment climate
improves. For example, we held roadshows on the east and west
coasts of the U.S. and participated in an investor conference
in San Francisco. Subsequent investor conferences took place
in Europe along with roadshows in Frankfurt, London, Dublin,
Paris and Lugano. All in all, we held discussions with more
than 100 investors, stock traders and analysts in the second
Software AG receives prestigious investor relations awards
Our investor relations activities were honored with the “Thomson Extel
Survey Beste IR Deutschland” award, attaining first place among
TecDAX companies. More than 500 investment professionals from
270 companies took part in the survey. The most important
criteria were clarity and transparency, proactive executive board
communication, quality of investor relations team’s
knowledge, service and responsiveness, formal disclosure and
general investor support.
At the 2006 "Capital Investor Relations Awards", Software AG’s
investor relations team achieved second place within the TecDAX.
Capital, a German business publication, awards its investor
relations prize to German and European companies included in
the Euro-Stoxx 50, DAX, MDAX, SDAX and TecDAX indices. More
than 250 analysts from 250 European banks, funds and corporations
participated in this survey. They assessed the quality of
investor relations activities on the basis of four criteria:
target group orientation, transparency, track record and extra financial
High attendance at Annual General Meeting
Our Annual General Meeting took place in Frankfurt, Germany, on May 12, 2006.
A total of 62.26 percent of equity capital entitled to vote was present, the
highest attendance level ever achieved. This was largely attributable
to our active investor approach. All ten agenda items were approved either
unanimously or by a large majority. Software AG paid out a total
of €22.4 million (€0.80 per share) to its shareholders as resolved
by the Annual General Meeting. The next Annual General Meeting
will take place on May 11, 2007 in Frankfurt/Main, Germany.
Changed shareholder structure
In comparison to December 2005, the number of shareholders
residing in Germany increased by 5 percent, and that of shareholders
residing in the UK by 4 percent.