Business software company SAP has delayed the release of its long-awaited software as a service (SaaS) offering for SMEs by 12-18 months following a weak first quarter.

SAP's profits fell 22 per cent in the first quarter to €242m (£191m) from €310m (£245m) a year earlier, largely due to a slump in US sales. Revenues reached $2.46bn, up from $2.16bn for 2007's first quarter.

SAP feared its first foray into web-hosted software – known as Business ByDesign – would not generate the planned €650m (£508m) revenues and has halved planned investments in the product to between €75m (£38m) and €125m (£63m).

The company said its income had been affected by a significant increase in acquisition-related charges as a result of its €4.8bn (£3.8bn) acquisition of Business Objects.

SAP shares fell as much as 6.5 per cent as a result of the news.

Oracle, Software AG and Epicor also posted disappointing results last month.