Updated from 4:13 p.m. EST

SAP ( SAP) won't meet revenue targets for the fourth quarter, though earnings will be a bit stronger than forecast, the German software giant announced late in Thursday's trading session.

Wall Street had expected sales in the fourth quarter to grow by about 17%, but they're now likely to grow by just 7%, to 2.95 billion euros, SAP said.

Shares nose-dived almost immediately, closing more than 10% lower to $48.50.

SAP'S initial guidance for the year called for software revenue to grow by 15% to 17% on the year, but by late last year the company said it would hit only the lower end of the range. And on Thursday, the company pulled back even more, saying software revenue would grow by about 13.5%.

But adjusted earnings, expected to range from 1.45 euros to 1.50 euros, will come in at "at least" 1.59 euros. Operating margins will increase by 60 basis points or 70 basis points, compared with the original forecast of 50 basis points to 1 percentage point.

Sales in the U.S., one of SAP's strongest regions, were hurt by the appreciation of the euro against the dollar. In constant currency, U.S. sales grew by 15% in the fourth quarter, but by only 4% in absolute euros. Similarly, growth in the U.S. for the year was a strong 17% excluding currency fluctuations, but only 13% in real terms.

U.S. companies, such as SAP's rival Oracle ( ORCL), generally gain when the dollar sinks. The two giants are locked in a battle for supremacy in sales of business applications -- a market once dominated by SAP.

But Oracle has beefed up its applications business via a $13 billion (minus cash) acquisition spree and is now a formidable competitor to SAP.

However, Oracle's shares weren't immune to the SAP warning; after trading flat for most of Thursday's session, they finished down 2% to $17.39.

SAP's results, along with guidance for 2007, will be released on Jan 24.