Sept. 20 (Bloomberg) -- SAP AG, the world's largest maker of business-management software, said rival Oracle Corp. is ``misleading'' customers by saying SAP will step up acquisitions and delay products in response to falling market share.

Remarks from Chief Executive Officer Larry Ellison yesterday about SAP's product and acquisition strategy ``are a complete misrepresentation,'' Walldorf, Germany-based SAP said in a statement. It's the first time SAP has directly responded to Oracle's comments on earnings.

Shares of Oracle had their biggest jump in almost five years today as the Redwood City, California-based company spent almost $20 billion in two years to peel away at SAP's dominance. The German company, the biggest producer of software for functions such as billing and human resources, said in July software sales in the second quarter missed expectations and conceded it lost market share to Oracle and Microsoft Corp.

``It seems Oracle is gaining more traction, and that SAP is falling a little bit behind,'' said John Segrich, an analyst at JPMorgan Chase & Co. in London, who rates SAP stock ``underweight.'' ``The fact that Oracle has beaten expectations for three quarters in a row puts pressure on SAP to come out and deliver a really strong quarter.''

SAP shares gained 3.53 euros, or 2.3 percent, to 154.76 euros in Frankfurt, while Oracle shares surged 11 percent to $17.93 at 4 p.m. New York time in Nasdaq Stock Market composite trading. SAP's shares have declined 1 percent this year, compared with a 47 percent increase in Oracle's stock.

Battle for Share

Ellison, reporting fiscal first-quarter earnings yesterday that beat analysts' estimates, said Oracle will continue to gain market share from SAP ``year after year, quarter after quarter,'' and that SAP is in the process of ``rethinking their strategy as they lose application market share to Oracle.''

Gaye Hudson, a London-based spokeswoman for Oracle, declined to comment on the SAP statement when reached by telephone today.

In 2005, SAP had a share of about 43 percent the global business-management software market, while Oracle had 19 percent, according to estimates by Boston-based AMR Research Inc. That's up from a 40 percent market share in 2004, AMR estimates.

Both SAP and Oracle run programs that aim to take orders from one another, and SAP says the plan resulted in an additional 300 orders since its introduction early last year. Board member Leo Apotheker in May said SAP had lost no orders to Oracle.

`Major Changes'

``In the context of what we said in the second quarter, SAP has very strong growth rates against Oracle and SAP reiterated it wins the majority of deals from Oracle,'' SAP spokesman Frank Hartmann said by telephone today. He declined to comment on SAP's market share for the third quarter. The German company reports earnings for the period on Oct. 19.

SAP is undertaking ``major changes in direction'' as SAP CEO Kagermann turns to acquisitions to ``augment SAP's slowing organic growth,'' Ellison said in a statement yesterday. He also said Kagermann delayed a new version of its main product until 2010, putting SAP two years behind Oracle's own schedule to release a new generation of software.

SAP won't put out new releases of its ERP2005 software, which was made commercially available earlier this year, over the next five years, Kagermann said at a conference in Leipzig yesterday. Michael Kleinemeier, head of the German unit, said in an interview that SAP will only introduce enhancements to the existing version.

SAP is in the middle of overhauling its software toward a so-called service-oriented architecture, or SOA, which allows companies to upgrade management software more easily. All of SAP's products will be able to run on the new platform by next year.

``The shift in the battleground to service-oriented infrastructure from the traditional packaged application favors Oracle and puts rival SAP in a position where they are playing from behind,'' said Credit Suisse Group analyst Jason Maynard in a note to investors. ``The company has a long way to go in earning their stripes in the standard middleware game.''

To contact the reporter on this story: Benedikt Kammel in Berlin at bkammel@bloomberg.net.

Last Updated: September 20, 2006 16:19 EDT