TechnologySAP suffers surprise profit slump

SAP suffers surprise profit slump

SAP shows a 33% decline in revenues missing analysts' forecasts

Accountancy and business software provider, SAP, has seen its quarter one
operating profits slump by 8%.

The IT company saw its revenue drop by 33% and net income by 16% to €204m,
surprising analysts who had expected the businesses to show an increase in
operating profit of 20%.

The German company saw total revenues for US GAAP software and software
related services fall by 3% from €2.46bn to €2.40bn, with non GAAP revenues
falling 4% from €2.51bn to €2.41bn. Earnings before interest and taxes stood at
Euros 332m (£293.6m).

A statement by the company said: ‘The decrease is the result of the difficult
operating environment worldwide due to the global economic downturn, and the
tough comparison to the first quarter of 2008, which was prior to the economic
crisis that disrupted the global markets in the third quarter of 2008 and also
included the effects from the acquisition of Business Objects.’

‘While visibility for software revenues remains limited, we continue to take
the necessary steps to protect our margin in this tough operating environment,’
said Léo Apotheker, co-CEO of SAP

‘The cost containment measures that we initiated in October of last year and
carried into the first quarter of 2009 have really taken hold, and we are
pleased with the resulting margin performance’ he added.

SAP reduced costs across the company in October as sales dropped sharply
including reducing its workforce from 48,500 to 51,800.

Further reading:

SAP R/3 users face upgrade pain

Agresso reports drop in licences

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