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Apr-30-2008SAP Slips on US Sluggishness(topic overview)
CONTENTS:
- The quarter is the first to incorporate the results of Business Objects, which SAP acquired Jan. 21. (More...)
- FRANKFURT, April 29 (Reuters) - Software maker SAP (SAPG.DE: Quote, Profile, Research ) reported a 15 percent rise in software and software-related service sales for the first quarter, missing expectations, and said it would cut planned investments in new software. (More...)
- The expected improvement will come from the reduction in SAP's investment in Business ByDesign. (More...)
- Shares were down $1.65, or 3.2%, to $50.80 in recent trading. (More...)
- SAP plans to cut research and development spending as a percentage of sales to 11 percent to 12 percent from the current 14 percent, Kagermann said April 3. (More...)
- Software license sales, a gauge of future consulting fees, rose 11 percent to 622 million euros, missing the 679 million-euro estimate in an analyst survey. (More...)
- AOL's Ad Revenue Rises Slightly as Income Drops AOL saw only a slight gain in its online advertising business for the first quarter of 2008, suggesting the company has a way. (More...)
- The company also reported non-GAAP income from continuing operations of 345 million euros, up 8% from 319 million euros in the prior-year quarter. (More...)
- SAP dropped as much as 1.4 euros, or 4.2 percent, to 31.65 euros in Frankfurt trading. (More...)
- SAP's commitment to the on-demand or Software as a Service (SaaS) market has been erratic. (More...)
- The figure came in below the 298 million euros consensus of eight analysts' forecasts polled by Thomson Financial News. (More...)
- The company launched the software, which is aimed at companies with 100-500 employees, in a test phase last year. (More...)
- Net income fell by 22% to $376 million (242 million euros), vs. $481.7 million (310 million euros) in the year-ago period. (More...)
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The quarter is the first to incorporate the results of Business Objects, which SAP acquired Jan. 21. The company said it is cutting investment in Business ByDesign, and will miss its target of US$1 billion in revenue and 10,000 customers for the product by 2010. It will now take a year to 18 months longer to reach that level, as it works with customers and partners to fine-tune the product, it said. SAP reported signing up more than 1,570 small and medium-size business (SMB) as new customers in the first quarter, excluding those brought by Business Objects, but few of those are using ByDesign. SAP expects to engage with fewer than 1,000 Business ByDesign customers in total this year, it said, and will concentrate its sales efforts on just six countries where the most productive early customers are based. It will delay rolling Business ByDesign out to other countries until next year, and as a result will invest around 100 million ($158 million) less in the product this year than it previously planned, cutting investment to between 75 million and 125 million. That will help boost SAP's operating margin, which dropped to 14.6 percent for the first quarter, down from 20.2 percent a year earlier. [1] Operating margin -- a gauge of profitability -- narrowed to 14.6 percent from 20.0 percent in the year-earlier period, hit by about 40 million euros of additional costs to lure midmarket customers to SAP's Business ByDesign. SAP said it is reshuffling market launch plans for its Business ByDesign software products and as a result now expects to reach its target of $1 billion in revenue from Business ByDesign between 12 months and 18 months later than the original 2010 target. This year, the German business software giant will launch the products in only six countries, with other rollouts expected in 2009. It also sees'significantly' less than 1,000 customers signing up for the Business ByDesign this year and now does not expect to reach its target of 10,000 customers earlier than 2011, a year later than planned.[2] Software revenues, another key indicator for the sector, increased 11 percent to 622 million euros, a statement said. SAP said it was reshuffling market launch plans for Business ByDesign software and now expected to reach its target of one billion euros in revenue from the products between 12 and 18 months later than the original 2010 target. This year, SAP will launch the software, which is designed for small- and medium-sized enterprises, in only six countries, with other roll-outs expected in 2009. It also expected "significantly" fewer than 1,000 customers to buy the products this year and did not expect to reach its target of 10,000 customers earlier than 2011, a year later than planned.[3]
SAP earlier said it still expects full-year software and software related service revenue -- excluding a 180 million euros non-recurring revenue writedown from the acquisition of Business Objects -- to increase in a range of 24 percent to 27 percent at constant currencies. Further disappointing the market, SAP said it is reshuffling market launch plans for its Business ByDesign software products and as a result now expects to reach its target of $1 billion in revenue from Business ByDesign between 12 months and 18 months later than the original 2010 target.[4] Seventeen founding members have launched BIAN based on the foundation of the Industry Value Network, or IVN, for Banks created by SAP. As an association, BIAN members will work within the industry to enable a non-disruptive, step-by-step evolution toward SOA, SAP said. Going ahead, SAP continues to expect that its full-year 2008 non-GAAP software and software related service revenue will increase in a range of 24% - 27% at constant currencies from 7.43 billion euros reported in fiscal 2007. SAP's business, excluding the contribution from Business Objects, is expected to contribute 12 to 14 percentage points to this growth. SAP said that in light of the modified rollout strategy, it will reduce its accelerated investments around SAP Business ByDesign in 2008 by approximately 100 million euros, which is expected to result in additional operating margin expansion in 2008.[5] The delay is necessary to ensure profitability of the product, Kagermann told "Squawk Box Europe." Its non U.S.-GAAP operating margin will be 28.5-29 percent this year at constant currencies, higher than its previously targeted 27.5-28 percent and last year's 27.3 percent, excluding a one-off revenue writedown, SAP said. For the first quarter, SAP reported a 15 percent increase in software and software-related service revenues to 1.736 billion euros thanks to its acquisition of Business Objects, lower than the average 1.829 billion forecast in a Reuters poll.[6] At constant currencies, the revenue grew 18%. SAP said that its small and midsize enterprise, or SME, business continued to perform well in the first quarter, with the addition of more than 1,570 new SME customers, a 28% rise from the prior-year quarter. The company said that its new solution, SAP Business ByDesign, is the principal component of its SME strategy and the company is working closely with early customers and partners to validate and fine-tune the solution. SAP's acquisition of Business Objects, a leading company in the sector of business intelligence, or BI, software, is seen as a landmark in its quest for additional revenue opportunities and potential synergies, while maintaining its lead over its main competitor Oracle Corp. (ORCL). SAP, which serves more than 41,200 customers in more than 120 countries with its applications, expects that the acquisition of Business Objects will accelerate its growth in the Business User segment. The company that forecasts 10% to 12% growth in software license sales this year said that the acquisition will significantly increase its revenues from new products and growing demands of Business Users. The transaction, which is expected to be accretive to SAP's GAAP earnings per share in 2009 and beyond, will also help the company to achieve its strategy of doubling its addressable market by 2010. Oracle's performance in its recently closed third quarter demonstrates its continuing leadership in database software.[5] SAP posts a weak Q1 as sales of its software fell in the U.S. and it continues to tweak its Business ByDesign software. FRANKFURT, April 30 (Reuters) - Business software maker SAP delayed by 12-18 months the rollout of new software on which its growth plans depend and reported a weak first quarter as American software sales fell, hitting its shares. SAP said on Wednesday it would now take longer to generate $1 billion in revenue from 10,000 Business ByDesign customers, which it had aimed to achieve by 2010, as it was still fine-tuning the product and would reduce investments this year. SAP shares fell as much as 6.5 percent and were 4.4 percent lower at 31.60 euros by 0803 GMT, making them by far the biggest losers in the DJ Stoxx 50 and taking 12-month losses to 7 percent, in line with Germany's blue-chip DAX.GDAXI.[7]
DZ Bank analyst Oliver Finger wrote: "In particular we are disappointed about the negative outlook for the new midmarket product Business ByDesign. Although we do not assume that this will have a major impact on the projected figures, it creates a very bad sentiment for this important product." SAP, which is making its first foray into Web-hosted software for the midmarket with Business ByDesign, said it would halve planned investments in the product to between 75 and 125 million euros ($117-$195 million) this year. Its non U.S.-GAAP operating margin will be 28.5-29 percent this year at constant currencies, higher than its previously targeted 27.5-28 percent and last year's 27.3 percent, excluding a one-off revenue writedown, SAP said.[7] SAP said it was still working to finetune the product. It said that as a result of the slower rollout it would reduce its accelerated investments in the new software by about 100 million euros ($156 million) this year, resulting in a higher non-U.S. GAAP operating profit margin of 28.5-29 percent. "SAP maintains its full confidence in the product, the market opportunity and the associated business model of SAP Business ByDesign, as the company continues to move toward volume readiness in 2008," it said in a statement.[8]
Last year, operating profit totaled 436 million euros. Kagermann also said that while SAP does not see any risk to its targets for software and software services revenue this year, the company would be prepared to act quickly 'if the situation in the U.S. spreads to other regions'. 'We could reduce variable expenses so that we could keep our current margin target for the full year,' he said. SAP earlier today raised its guidance, saying it now sees its 2008 operating margin in the range of 28.5 percent to 29.0 percent as it cuts investments in its Business ByDesign software by about 100 million euros.[9]
FRANKFURT, April 28 (Reuters) - SAP (SAPG.DE: Quote, Profile, Research ) is having ongoing teething problems with its new on-demand software aimed at smaller companies, probably delaying its rollout and endangering mid-term sales goals, Handelsblatt said on Monday. Citing sources close to the company, the business daily said SAP's target of generating 1 billion euros ($1.6 billion) in sales from its new Internet-delivered and hosted Business ByDesign software by 2010 was now in jeopardy. "It's only a matter of time before this goal is toppled," the newspaper quoted a source close to SAP as saying. An SAP spokeswoman declined to comment on the report, except to say executives would answer questions on the subject when the company presents its first-quarter results on Wednesday. SAP, the world's biggest maker of business software, has budgeted about 400 million euros for the development and marketing of Business ByDesign, which is supposed to be ready for the mass market by the end of this year. The venture is SAP's first foray into the world of software as a service pioneered by U.S. software maker Salesforce.com (CRM.N: Quote, Profile, Research ), in which software makers charge subscription fees for hosting and managing IT systems for their clients remotely.[10] German software company SAP sparked fears that it was succumbing to an industry-wide slowdown on Wednesday, after reporting a worse-than-expected performance for the first quarter. Although the company cited specific issues with its Business ByDesign software range, which has eaten up 40 million euros ($62.2 million) in extra investment over the past three months, the fact that SAP (nyse: SAP - news - people ) missed both sales and profit forecasts for the quarter suggested that a weaker macroeconomic environment was taking effect.[11] BERLIN (AP) — Software maker SAP AG said Wednesday its profit slipped in the first quarter because of its takeover of a software company along with a weaker dollar, but its sales were higher and it raised its 2008 outlook. The Walldorf-based company, whose programs help companies do back-office work such as payroll, inventory management and accounting, said its net profit in the January-March period fell 22 percent to 242 million euros ($376.82 million) from 310 million euros a year earlier, below the 296 million euros ($460.9 million) that analysts polled by Dow Jones Newswires had forecast.[12]
Shares of SAP fell more than 6 percent in midday trading in Germany. The company, which is making its first foray into Web-hosted software for the midmarket with Business ByDesign, said it would reduce planned investments in the product by about 100 million euros ($156 million) this year.[6] We have to improve that," Kagermann said. SAP reported signing up more than 1,570 small and medium-size businesses (SMBs) as new customers in the first quarter, excluding those brought by Business Objects, but few of those are using ByDesign. SAP expects to engage with fewer than 1,000 Business ByDesign customers in total this year, it said, and will concentrate its sales efforts on just six countries where the most productive early customers are based. The company plans to maximise the return on its investment to date in Business ByDesign by reusing its innovations and technologies in existing products, a move it expects will contribute significantly to revenue in 2010. The company said it maintains its full confidence in the Business ByDesign and the associated business model.[13] "Our growth strategy, which comprises three pillars — the established business, the midmarket and the business user solutions — is working quite well," Chief Executive Henning Kagermann said in a statement, adding that SAP's presence globally has helped it move forward. The company said that its efforts to bring its subscription-based software Business ByDesign to six countries — where it has early adopter customers — would start this year with more countries expected to follow in 2009. "It is expected to take around 12 months to 18 months longer than the original 2010 target to reach the SAP Business ByDesign $1 billion (640 million euros) revenue and 10,000 customer potential," the company said in a statement. "However, the company will use SAP Business ByDesign innovations and technologies for the existing solutions and this will contribute significantly to the overall revenues of SAP in 2010."[12] SAP said it will take about 12 months to 18 months longer than the original 2010 target until the subscription-based software called Business ByDesign will reach $1 billion in sales and 10,000 customers. The company raised its forecast for the operating margin, before some items, which is a profitability gauge expressing operating profit as a percentage of sales. In constant currencies it is now aims to reach 28.5 percent to 29 percent this year, an increase of one percentage point compared to a January guidance. "The company forecast a higher margin, but that looks artificially inflated as it's due to the problems with Business ByDesign,'' said Christian Falkner, a trader at alpha Wertpapierhandel in Frankfurt.[14] Operating profit came in at '359 million, down from '436 million, as SAP continued to integrate the French company Business Objects, which it bought last year for '4.8 billion. SAP raised its 2008 forecast for operating margin to 28.5 to 29 percent as it cuts spending on Business ByDesign by about '100 million this year.[15]
The slower than expected developments at Business ByDesign are not good news, but were to a certain extent to be expected, and good news is that Business ByDesign will (after 2008) no longer drag down earnings, said MM Warburg analyst Michael Bahlmann. On the upside, SAP raised its guidance for full-year operating margin to a range of 28.5 percent to 29.0 percent, compared with a previous target of 27.5 percent to 28.0 percent, as it cuts investments in Business ByDesign by about 100 million euros this year.[4] U.S. GAAP earnings per share from continuing operations for the first quarter of 2008 was euro 0.21, compared to euro 0.26 in 2007 and non-GAAP earnings per share continuing operations from rose 12% to 0.29 from euro 0.26. SAP said that in light of the modified rollout strategy, it will reduce its accelerated investments around SAP Business ByDesign in 2008 by approximately euro 100 million, which is expected to result in additional operating margin expansion in 2008.[16] SAP said that American sales had fallen by 1.6%, on a constant currency basis, to 244 million euros ($379.4 million). SAP is attempting to boost its profitability by reducing investment in Business ByDesign, its range of products tailored to the small-to-medium enterprise market. The company said on Wednesday that it would cut spending by approximately 100 million euros ($155.5 million) in 2008, which it hopes will boost its operating margin to 28.5%-29.0%, from a previous forecast of 27.5%-28.0%.[11]
FRANKFURT (Thomson Financial) - SAP (nyse: SAP - news - people ) AG. said first-quarter net profit fell 22 percent to 242 million euros from 310 million euros in the previous year as the company spent more in the run-up to a planned market launch of its new Business ByDesign products and was hit by acquisition-related charges.[2] Business ByDesign is SAP's biggest effort to-date to move into the SME space, targeting companies of 100-500 seats. It has failed to sell in the quantities predicted by the company, forcing SAP to delay its plans of $1 billion ('500 million) in revenue from 10,000 customers by an addition 12-18 months from the original 2010 target. The company also confirmed that it was still making tweaks to the product and as a result would launch Business ByDesign in only six countries this year.[17] We remain confident we can reach our topline growth target. The German business software giant earlier said it is reshuffling market launch plans for Business ByDesign and as a result now expects to reach its target of $1 billion in revenue from Business ByDesign between 12 months and 18 months later than the original 2010 target. Kagermann said the company will need this additional time to take measures to make sure the product is profitable.[18]
Results for the first quarter ended 31 March 2008 show revenues up 14 per cent to 2.46bn, but net income is down 22 per cent to 242m, compared to 310m for the same period of 2007. The company is delaying rollout of its Business ByDesign product - an online software-as-a-service aimed at small and medium businesses. For this year it will concentrate on six countries, and it predicts it will take a year to a year and half longer than expected to get to 1bn revenues and 10,000 customers. It expects to have less than 1,000 customers this year.[19] SAP is putting the brakes on the roll-out of Business ByDesign, its offering for small businesses, it said Wednesday, as it reported first quarter net income down 22 percent compared to a year earlier, on revenue up 14 percent.[1] SAP has announced plans to slow rollout of its small-business offering Business ByDesign after the sluggish U.S. economy sapped its first-quarter profits, reports InfoWorld. The German company said Wednesday its first-quarter net income was down 22 percent compared with the same quarter a year ago, with revenue up 14 percent.[20]
Although first-quarter revenues grew 14% year on year to reach €2.46 billion (£1.94 billion), operating income fell 18% compared to the year-ago period, down to €359 million. To improve its profit margins, the company has taken the decision to spend €100 million less on developing Business ByDesign than it had originally planned, therefore delaying its release.[21]
Software revenues, another important indicator for the sector, increased however by 11 percent to '622 million. SAP also said it was changing launch plans for Business ByDesign software and now expected to reach its target of '1 billion in revenue from it between 12 and 18 months later than the original 2010 target.[15] Looking ahead, SAP said it expected 2008 software and software-related service revenue, excluding the contribution from software company Business Objects, to increase by between 12 percent and 14 percent. It will also buy back another 250 million euros ($389.3 million) worth of its shares.[12] SAP said it still expects full-year software and software related service revenue -- excluding a 180 million euros non-recurring revenue writedown from the acquisition of Business Objects -- to increase in a range of 24 percent to 27 percent at constant currencies.[2] Non-GAAP software and software related service revenues, which excluded a non-recurring deferred support revenue write-down from the acquisition of Business Objects of 47 million euros, rose 18% to 1.78 billion euros from 1.52 billion euros a year ago.[5] Non-GAAP earnings per share continuing operations rose 12% to 0.29 euros from last year's 0.26 euros. The non-GAAP results excluded a non-recurring deferred support revenue write-down from the acquisition of its French rival Business Objects and acquisition-related charges, totaling 98 million euros.[5] Excluding the Business Objects acquisition related deferred support revenue write-down and charges of 130 million euros, operating income rose 9% from last year to 489 million euros.[5]
The target excludes a non-recurring deferred support revenue write-down from the acquisition of Business Objects and acquisition related charges. The company previously said it planned to spend between 175 million euros and 225 million euros on the product this year. UniCredits Woller pointed out that the lower level of investments will help the companys bottom line this year.[4] SAP had 130 million euros in charges from the 4.8 billion-euro purchase of French rival Business Objects SA in February, and the company delayed a sales target for a new software product.[14]
The euro advanced 8.4 per cent against the dollar in the first quarter. SAP, based in Walldorf, Germany, completed the purchase of its French rival Business Objects SA for 4.8 billion in February. The company's goals beyond this year include expanding the addressable market for its products to about $US75 billion ($80 billion) by the end of 2010.[22] The company reported a net profit of €242 million ('191.1 million) for the first quarter of 2008, down 22 per cent from €310 million ('244.8 million) it reported in the same quarter in 2007, based on U.S. GAAP accounting rules. GAAP profits were hit by one-off charges associated with the company's ?3.3 billion acquisition of Business Objects in October 2007. However, the company insisted earlier this month that it remained on schedule with its plans for releasing the next version of the Business Objects business intelligence product, XI 3.0.[17] Business intelligence was another important element, which was showing excellent progress. Last year's acquisition of Business Objects was "completely on track", he added. The final prong and "backbone" of SAP's growth plan was its established ERP business, which was growing well, he said. Kagermann boasted that this was SAP's 17th consecutive quarter of double-digit growth, but he and his colleagues had to field questions raising doubts over the company's performance in the U.S., and questioning the success of the Business Objects deal. Previously more interested in developing its own, high-end ERP products, the acquisition represented a cultural transition for the company.[23]
FRANKFURT, April 30 (Reuters) - Business software maker SAP (SAPG.DE: Quote, Profile, Research ) posted disappointing first-quarter results as a weak U.S. economy started to bite, and delayed targets for new software on which its growth plans depend, hitting its shares. SAP reached the lower end of its full-year target range for growth in software and software-related services sales and kept its sales forecast on Wednesday as it begins to integrate Business Objects, its biggest-ever acquisition.[24] Analysts had expected revenue to rise around 40 percent to $3.96 billion (2.51 billion), according to a consensus poll of 13 analysts by Thomson Financial Network. The results incorporate those of Business Objects from Jan. 21, excluding some ongoing support revenue that U.S. Generally Accepted Accounting Principles (GAAP) prevent SAP from recognizing. The results are preliminary, and depend on the as-yet undecided final purchase price allocation SAP must make for its acquisition of Business Objects.[1]
Additional country rollouts will be executed in 2009. The company also said that SAP Business ByDesign is expected to take around 12 months to 18 months longer than the original 2010 target to reach its $1 billion revenue and 10,000 customer potential.[5] SAP is cutting investment in Business ByDesign, its hosted offering for small businesses. The company has said that it aims to make it easier to use in an attempt to reach its target of US$1 billion in revenue and 10,000 customers.[13]
Business ByDesign, developed to expand SAP's customer base in the mid-market, was originally supposed to reach 10,000 customers and generate $1 billion in revenue by 2010.[8] SAP said it would now take longer to generate $1 billion in revenue from 10,000 Business ByDesign customers, which it had aimed to achieve by 2010. SAP CEO Henning Kagermann told CNBC Europe that he did not expect an overall slowdown in IT spending this year, but acknowledged that business in North America is slowing.[6]
Winfried Rapp, UK chief financial officer for SAP, told IT PRO that the company still expects to achieve significant operating synergies once the Business Objects integration is completed. "The integration of Business Objects is a significant task, though not our most important objective for this year," he said. The lacklustre results were also blamed in part on the poor performance of its Business ByDesign software-as-a-service (SaaS) product, which was announced in September 2007. "It takes a while for the market to adopt a new product such as this," said Rapp. It has been a huge challenge creating Business ByDesign, in a way it has been like setting up a whole new company as we have had to construct a whole new channel and partner network in order to sell and support it."[17] FRANKFURT (Thomson Financial) - The market launch of SAP AG's software for medium-sized businesses, Business ByDesign, will probably be delayed and could force the company to revise down its revenue guidance for the product, Handelsblatt reported, citing sources close to the company. The software is not performing as it should, the sources said, adding it is only a matter of time before SAP (nyse: SAP - news - people ) revises its targets.[25] "We are disappointed about the negative outlook for the new mid-market product, Business ByDesign," wrote Oliver Finger, an analyst for German investment bank DZ Bank. "Although we do not assume that this will have a major impact on the projected figures, it creates a very bad sentiment for this important product." Business ByDesign will be SAP's first foray into on-demand software delivery, and the company hopes it will open a new market for its applications - those companies that cannot afford its high-end applications, but which require more sophisticated software than its small business offerings.[21] PARIS (04/30/2008) - SAP reported net income down 22 percent for the first quarter, and said it is cutting back its investment in Business ByDesign, its new product for SMBs.[26] SAP has increased revenues for the first quarter of this year, but net income has fallen and it is delaying the rollout of its webhosted business management product.[19]
Net income in the first quarter fell 22 percent to 242 million euros ($377 million), SAP said today.[14] SAP's software sales, a closely watched barometer because it results in future revenue from maintenance and consulting services, rose 11 percent to 622 million euros ($968.5 million) from 562 million euros.[12] Software licence sales, a gauge of future fees from maintenance and consulting, rose 11 per cent to 622 million, missing the 679 million median estimate in a survey of 19 analysts. The greenback's slide against the euro cut the value of SAP's revenue from the U.S., its largest market by sales.[22]
License revenue at Software AG, Germany's second-largest software maker, fell short of analyst estimates in the first quarter as the euro's strength decreased sales by 11 million euros. IDS Scheer AG, the software maker founded by August- Wilhelm Scheer, cut its full-year outlook last week.[14]
German-based SAP said net profit during the first three months of the year dropped to a lower-than-forecast 242 million euros (377 million dollars) from 310 million euros a year earlier. The group said its key software licence sales climbed 11 per cent to 622 million euros.[27]
Operating margin, a key gauge of profitability, narrowed to 14.6 percent from 20 percent in the year-earlier period, hit by about 40 million euros of additional costs to attract customers to SAP's new Business ByDesign software.[3] Net profit fell 22 percent to 242 million euros as the company spent more in the run-up to the planned launch of Business ByDesign and was hit by acquisition-related costs.[4] SAP said profit fell to '242 million ($377 million) owing to increased spending on the launch of its Business ByDesign software and charges related to a recent major acquisition.[15] FRANKFURT, Germany--German software giant SAP said Wednesday that first quarter net profit fell 22 percent as it spent more ahead of the launch of new products and was hit by charges from recent acquisitions.[3] German software giant SAP said Wednesday that first quarter net profit fell 22 percent and disappointed investors as it delayed the launch of a new product for small- and medium-sized enterprises.[15]
FRANKFURT, April 29 (Reuters) - Software maker SAP (SAPG.DE: Quote, Profile, Research ) reported a 15 percent rise in software and software-related service sales for the first quarter, missing expectations, and said it would cut planned investments in new software. [28] "Customers are more cautions and the deal size is lower than in past quarters." In the United States, where SAP makes a quarter of its sales, software and software-related service revenues slipped 1 percent, while in Europe, which accounts for half of SAP's business, they rose by 22 percent.[6] SAP predicted in January software and related service revenue would rise 12 percent to 14 percent in 2008, excluding Business Objects and currency swings.[14]
In the first quarter, SAP's GAAP software and software related service revenues totaled 1.74 billion euros, a 15% rise from 1.52 billion euros in the previous-year quarter.[5] First-quarter software and related service revenue rose 15 percent to 1.74 billion euros, missing analysts' estimates.[14] SAP's total revenue rose 14 percent to 2.46 billion euros ($3.83 billion) from 2.1 billion euros a year ago, just above the 2.45 billion euros ($3.81 billion) that analysts had forecast.[12] Software and related service revenues, an important indicator of future maintenance revenue streams, were 1.736 billion euros ($2.70 billion), compared with an average of 1.829 billion euros forecast in a Reuters poll of 22 analysts.[28] First-quarter software and software-related service revenue climbed to 1.736 billion euros, while last year saw a respective 1.515 billion euros.[2]
Total GAAP revenues increased 21% to $5.35 billion from $4.41 billion a year ago, while non-GAAP revenue increased 22% to $5.37 billion from $4.45 billion last year. According to analysts, Oracle's database management software business is continuing its double-digit growth rate despite inroads by IBM (IBM) and Microsoft (MSFT).[5] The Redwood Shores, California-based company's third-quarter earnings rose 30% from last year, helped by strong growth in database and middleware new software license sales and higher revenues from software license updates.[5] On a non-GAAP basis, the company's income from continuing operations rose 8%. The company also recorded a 14% rise in GAAP revenues, driven by double-digit revenue growth in its software and software related services. SAP also confirmed its non-GAAP software and software related service revenue growth outlook for fiscal 2008.[5] Co-CEO Henning Kagermann said the strengthening of the euro against the dollar also hurt SAP's results, "resulting in a huge negative headwind for SAP, roughly 10 percentage points." He preferred to focus analysis on non-GAAP figures, excluding currency effects and acquisition costs. On that basis, SAP's first-quarter revenue rose 22 percent, and net income rose 7 percent, the company said.[26] The company said its income was impacted by 40 million euros in accelerated investments in Business ByDesign and "a significant increase in acquisition-related charges" as a result of its 4.8 billion-euro acquisition of Business Objects.[6] Non-GAAP income from continuing operations, which excludes a non-recurring deferred support revenue write-down from the acquisition of Business Objects and acquisition-related charges totaling euro 98 million, rose 8% to euro 345 million from euro 319 million a year earlier.[16] Chief Financial Officer Werner Brandt said on Wednesday that charges associated with the acquisition of Business Objects dragged down SAP's operating income by '130 million. He said those numbers "are simply accounting driven."[26] The U.S. GAAP figure was affected by '130m in acquisition and related charges that were "simply accounting-driven". Executives also pointed out that Business Objects had a 2% operating margin when SAP acquired it, which further depressed its margins.[23]
The previous forecast for the margin -- excluding a non-recurring deferred support revenue write-down from the acquisition of Business Objects (nasdaq: BOBJ - news - people ) and acquisition related charges -- was at 27.5 percent to 28.0 percent.[2]
The expected improvement will come from the reduction in SAP's investment in Business ByDesign. The company plans to maximize the return on its investment to date in Business ByDesign by reusing its innovations and technologies in existing products, a move it expects will contribute significantly to revenue in 2010. The company said it maintains its full confidence in the Business ByDesign and the associated business model. [1] Now we will have to add tools and automation around the product to reduce manual work and increase profitability, Kagermann said. This year, the German business software giant will launch the products in only six countries, with other rollouts expected in 2009. It also sees significantly less than 1,000 customers signing up for the Business ByDesign this year and now does not expect to reach its target of 10,000 customers earlier than 2011, a year later than planned.[18] FRANKFURT (Thomson Financial) - SAP AG. remains totally committed to its new Business ByDesign software product after announcing delays of at least a year in the products rollout, chief executive Henning Kagermann said. This delay has nothing to do with the market environment, Kagermann told journalists in a conference call.[18] We have had time in the past quarters to measure the cost that comes to SAP in running and servicing the product, Kagermann said. In contrast to most business software products, which are shipped to customers who then configure and install the software themselves, SAP plans to do much of this work for Business ByDesign in-house.[18]
"In particular we are disappointed about the negative outlook for the new midmarket product Business ByDesign. Although we do not assume that this will have a major impact on the projected figures, it creates a very bad sentiment for this important product," he added. The poor results from SAP, whose software helps large companies automate and manage functions such as supply-chain management, human resources or compliance, confirm a dismal trend in software earnings reported this quarter.[6] FRANKFURT (Thomson Financial) - SAP AG. disappointed investors Wednesday when it delayed the rollout of its new Business ByDesign software product and reported weaker-than-expected first-quarter results.[4]
German software giant SAP has run into problems with its Business ByDesign product, with the full launch likely delayed and sales forecasts having to be cut, a press report said Monday.[29]
The positive side is SAP still has buffers to counter potential outside margin pressure." A spokesman for SAP was unavailable for comment, but the company said that its Business ByDesign sales and customer targets would take 12-18 months longer to achieve.[11] The company had hoped to attract 10,000 users and 1 billion (£500,000) in revenue with Business ByDesign by 2010. SAP CEO Henning Kagermann told investors this week that it was now unlikely to hit that target.[21]
SAP's co-chief executive Henning Kagermann said in February that SAP would sooner or later be able to reach an operating profit margin of about 35 percent, and that exceeding that would depend on the success of Business ByDesign as a volume business.[10] What SAP still needs to work out is how expensive it will be to run Business ByDesign in a hosted environment for clients. Kagermann put his finger on one of the key disruptive factors of providing software as a service - that it may well undercut the price and margin models of its existing business.[23] SAP launched Business ByDesign, which is aimed at companies with 100-500 employees, in a test phase last year. The setback was not expected to affect SAP results for 2008 but could cast a shadow over its future. The German group has decided to focus on the lucrative software market for mid-sized companies as its initial business model based on serving large ones has run out of steam[29]
SAP this week announced that it would not achieve its target of 1,000 customers for its new, hosted Business ByDesign ERP application by the end of the year.[23]
Cambridge, Mass. -based Forrester Research attributes the slowdown in part to SAP's new chief operating officer, who is taking a closer look at expense line items, according to Ray Wang, principal analyst. SAP has reduced investment in the product by about 100 million euros or $155 million this year.[30] The company said quarterly profits had fallen 21.9%, over the year, down to 242 million euros ($376.3 million), while a 13.8% rise in overall sales failed to match the hoped-for increase of 18.5%.[11] In Euros, the company posted net loss of 118 million euros or 0.01 euros per share, compared to net profit of 805 million euros or 0.04 euros per share in the prior year.[16] On a non-GAAP basis, the company's first-quarter net income increased to 340 million euros, or 0.28 euros per share, from 317 million euros, 0.26 euros per share, in the same quarter last year.[5]
The world's largest enterprise software company reported GAAP net income of $1.34 billion, or $0.26 per share, compared to $1.03 billion, or $0.20 per share, for the year-ago quarter.[5] Based on Japanese GAAP, the company's full-year net income declined to 235.29 billion yen, or 141.17 yen per share, from 320.38 billion yen, or 188.83 yen per share, last year.[16]
Looking ahead, based on U.S. GAAP, Mitsubishi expects fiscal 2009 net income of 580 billion yen, or 353.40 yen per share.[16]
"We have actually gained market share in the U.S." For the full year, the company expects revenue for software and software-related services, excluding special items, to grow by 24% to 27%, which would be a range of $14 billion to $14.7 billion.[31] Rollout of the hosted service will be limited in 2008 to six countries where it has found the most traction so far, reports ZDNet. It expects to have significantly fewer than 1,000 customers this year. The company also said it will take 12 to 18 months beyond its 2010 target to reach its goals of 10,000 customers and $1 billion in revenue with the service. It expects the service to "contribute significantly" to the company's overall revenues in 2010.[20] The company said it will take 12-18 months longer than the original 2010 target to reach $1 billion in revenue from the project.[32]
At present, the company predicts the software will add $1 billion revenues a year from 2010 onwards.[25]
The BEA Systems acquisition will significantly enhance and extend Oracle's Fusion middleware software suite. Oracle expects the acquisition to be accretive to its earnings by at least $0.01 to $0.02 on a non-GAAP basis in its first full year after closing. Separately, SAP today said that the company, along with Microsoft and other founding members, has created the Banking Industry Architecture Network, or BIAN, to help banks ease the transition to a service-oriented architecture, or SOA, for their business operations.[5] The Internet-based software, in which SAP has placed great hopes, is not performing as it should and would require fresh work, the Handelsblatt business daily reported, citing sources close to the company. They said it was only a matter of time before SAP revised its earnings targets for the product downwards.[29] Business software company SAP reported quarterly results that fell shy of expectations Wednesday and also said it will delaying the launch of new subscription software for small and medium businesses.[6] FRANKFURT -- Software company SAP AG said Wednesday its first-quarter net profit fell 22% due to costs associated with the takeover of French software firm Business Objects.[33] Mr Apotheker will become sole chief when Mr Kagermann retires next May. SAP is returning to a double leadership as it digests the Business Objects takeover and rolls out new subscription-based software to help maintain its lead over Oracle, its main competitor.[22]
We see the risk that full-year growth targets could be missed, said UniCredit analyst Knut Woller. Second-quarter comparables are a high barrier to cross, when both SAP and Business Objects reported clear double-digit license growth rates of around 20 percent year-on-year.[4] "Based on the softer-than-expected start into the year. we see the risk that the full year growth targets could be missed," UniCredit analyst Knut Woller wrote in a note. Woller, who rates SAP "buy", cut its price target to 42 euros from 50 euros.[7]
Press reports have said SAP is having problems with the product, which was billed as a pillar of future growth. This year, SAP will launch the software in only six countries, with other roll-outs expected in 2009.[15] "Since September, the group is working closely with clients and partners to validate and adjust solutions," SAP said. It expected "significantly" fewer than 1,000 customers to buy the product this year and did not foresee reaching its target of 10,000 customers earlier than 2011, a year later than planned.[15]
SAP said it "maintains full confidence in the product, the market opportunity and the associated business model of SAP Business ByDesign." SAP this morning is down $2.57, or 4.9%, to $49.88.[32] SAP's on-demand competitors were obviously not so optimistic about the future of Business ByDesign. "This delay indicates there is something seriously wrong at SAP, given this is the third missed date," Zach Nelson, CEO of NetSuite wrote in an email. "I think the delay has to do with the fact that they have built the product around multiple data silos rather than using the NetSuite approach of a single data model to support the application. When they do finally come to market (maybe IF they come to market), and Business ByDesign has multiple data stores, the product will be dead on arrival."[30]
SAP is in no rush to deploy the product more widely until it is sure it can deliver it profitably, said co-CEO Henning Kagermann. "We have to work out how expensive it will be for SAP if we run this product in a hosted environment. We have to make sure we make enough money with the product," he said. To do that, SAP will take more time to optimise the end-to-end process of selling, delivering and running Business ByDesign, he said.[13] According to Kagermann, the company's mid-market products (Business ByDesign, Business One and All in One) were a key part of SAP's growth strategy.[23]
In an early morning conference call, Henning Kagermann, SAP's CEO, said the company is cutting back on development of Business ByDesign because of customer feedback.[30] SAPs chief executive Henning Kagermann sought to calm jittery investors by saying the company is totally committed to Business ByDesign, adding the delay has nothing to do with the market environment.[4]
In 2008, the company's go-to-market efforts for SAP Business ByDesign will focus on six countries.[5]
Analysts said Business ByDesign needed work to compete with established companies and that midmarket firms were reluctant to adopt it. That work will now take a little longer to complete, based on today's news. In addition to its commitment to SaaS, Business ByDesign represents SAP's commitment to the midmarket.[30] FRANKFURT (Thomson Financial) - SAP (nyse: SAP - news - people ) AG.' s co-chief executive Leo Apotheker said the company maintains its expectations for its U.S. business after some headwinds in the first quarter. 'Overall I feel we have a strong U.S. business,' he told analysts during a conference call.[9] Chief executive Henning Kagermann also said that the weak U.S. dollar hurt the company's operating income in the first quarter, with a net negative effect of 46 million euros.[9] For the previous sequential quarter, the company reported net income of 756 million euros.[5] The company reported net income of 242 million for the quarter, on revenue of 2.46 billion, compared to net income of 310 million on revenue of 2.16 billion a year earlier.[1] For the quarter, the company reported revenue of 2.5 billion Euros, up 16% versus a year earlier.[32] Total revenue for the first quarter rose to 2.46 billion euros from 2.162 billion euros in the same period a year earlier, the German group said.[3]
Software revenue rose to 622 million euros, up from last year's 562 million euros, while analysts forecast 689 million euros.[2] GAAP software revenues rose 11% to 622 million euros from 562 million euros in the prior-year quarter.[5]
GAAP operating income fell 18% to 359 million euros from 436 million euros a year ago, with 5.6 percentage points of decline in operating margin, which reached 14.6% in the quarter.[5] The company's first-quarter GAAP net income was 242 million euros, lower than 310 million euros last year.[5] GAAP income from continuing operations reached 247 million euros, a 21% decline from 312 million euros last year.[5]
U.S. GAAP income from continuing operations for the quarter was euro 247 million, compared to euro 312 million last year, representing a decrease of 21%.[16]
U.S. GAAP earnings per share from continuing operations for the 2008 first quarter was euro 0.21, compared to euro 0.26 in 2007 and non-GAAP earnings per share continuing operations from rose 12% to 0.29 from euro 0.26.[16] Earnings per share declined to 0.20 euros from 0.26 euros in the prior-year quarter.[5]
Shares were down $1.65, or 3.2%, to $50.80 in recent trading. The German business software developer said its top line grew 13.8% to $3.82 billion (2.46 billion euros), from $3.36 billion (2.162 billion euros) for the same quarter of last year. [31] SAP shares are losing ground in early trading after the German software giant reported disappointing Q1 results, and lowered its expectations for the rollout of SAP Business By Design, its on-demand software service.[32] SAN FRANCISCO - Shares of SAP SAP dropped Wednesday after first-quarter revenue fell short of expectations on weaker U.S. business.[31]
Analysts see SAP's revenue growing at around 26.5 percent during the current quarter, but slipping back in the third quarter to around 16 percent for a full-year average of 26.9 percent, according to the Thomson poll. SAP raised its operating margin expectations for the full year, to between 28.5 percent and 29 percent at constant exchange rates, compared to 27.3 percent in 2007. It had previously indicated a range of 27.5 percent to 28 percent.[1] Looking ahead, SAP expects full-year software and software-related service revenue to increase by between 24 percent and 27 percent at constant exchange rates.[1] We expect some disappointment in the market today because license revenues were 10 percent below expectations and software and software related service revenues were 3 percent below the consensus, said Merck Finck analyst Theo Kitz.[4]
The German company's revenue in the three months through March rose to €2.46 billion from €2.16 billion a year earlier, below analysts' expectations of €2.54 billion. This includes software revenue, a closely-watched indicator as it generates future revenue from maintenance and consulting.[33] The company's total revenues, based on GAAP, grew 14% to 2.46 billion euros from 2.16 billion euros a year earlier.[5] Based on non-GAAP, revenues totaled 2.51 billion euros, up 16% from 2.16 billion euros in the previous year.[5]
SAP has forecast sales of one billion euros (1.57 billion dollars) a year from 2010 onwards.[29] Oracle Corp., SAP's main competitor, reported on March 26 fiscal third-quarter sales that trailed the average estimate of analysts in a Bloomberg survey after customers delayed orders on concern that the U.S. economy is slowing. SAP reiterated its forecasts for this year in its 2007 annual report this month.[14]
The weakness of dollar against euro has lowered the value of SAP's revenue from the U.S., the company's largest market by sales.[5] "We continue to watch the U.S. market closely." SAP's results continued a dismal trend in this quarter's software earnings, a change from recent quarters when vendors of corporate software had appeared shielded from the effects of a U.S. economic slowdown. Oracle posted weaker-than-expected software sales last month and some smaller software makers such as Software AG (SOWG.DE: Quote, Profile, Research ), Lawson (LWSN.O: Quote, Profile, Research ) and Epicor (EPIC.O: Quote, Profile, Research ) also disappointed.[24] FRANKFURT, April 30 (Reuters) - Business software maker SAP (SAPG.DE: Quote, Profile, Research ) sees no signs that IT spending will slow down in the second half of the year, Chief Executive Henning Kagermann told CNBC Television on Wednesday. "No," he answered when asked whether he expected such a slowdown.[34] FRANKFURT, April 30 (Reuters) - Business software maker SAP (SAPG.DE: Quote, Profile, Research ) is postponing by 12-18 months its targets for new Web-hosted software on which its growth plans depend, it said on Wednesday.[8]
Henning Kagermann, joint CEO at SAP, said: "Our growth strategy, which comprises three pillars the established business, the midmarket and the business user solutions - is working quite well." He said adoption of ERP 6.0 is exceeding expectations and the midmarket is growing well, with over 1,570 customers added in the quarter.[19] Around half of that growth will come from SAP's ongoing business, and half from Business Objects, it said.[1] SAP completed the purchase of Business Objects for 4.8 billion euros in February.[5]
SAP plans to cut research and development spending as a percentage of sales to 11 percent to 12 percent from the current 14 percent, Kagermann said April 3. Other goals include expanding the addressable market for its products to about $75 billion by the end of 2010. [14] The firm had initially predicted the product range would earn $1 billion in sales and reach 10,000 customers by 2010.[11]
Software license sales, a gauge of future consulting fees, rose 11 percent to 622 million euros, missing the 679 million-euro estimate in an analyst survey. [14] SAP earlier today said operating profit came in at 359 million euros in the three months through March, below the analyst consensus of 466 million euros.[9] Analysts had predicted profit of 340 million euros, the median of seven estimates compiled by Bloomberg.[14]
Net profit in the January to March period fell to €242 million ($376.9 million) from €310 million in the prior year, below analysts' expectations of €296 billion.[33] Net income fell to 242 million ($404 million) from 310 million a year earlier, SAP said yesterday.[22] Total operating income fell 18 percent to 359 million euros, less than the lowest estimate in the Reuters poll, and net income fell 22 percent to 242 million, missing the poll average.[6] Earnings before interest and tax (EBIT) fell 18 percent to 359 million euros, less than the lowest estimate in the Reuters analyst poll.[28]
SAP also expects to invest an additional approximately 250 million euros in buying back shares.[5] Shares in SAP fell 1.50 euros ($2.33), or 4.5%, to 31.55 euros ($49.06), during midday trading in Frankfurt.[11] Shares in the professional software giant plunged in early Frankfurt trading, shedding 4.36 percent to 31.61 euros, while the Dax index of leading shares was flat overall. "The figures across the board were below expectations; net profit looks especially weak," said a local trader in his first reaction. Another said bluntly: "This was a very bad report."[15] SAP, the world's biggest maker of business-management software, said first-quarter profit fell 22 per cent as the U.S. dollar lost value against the euro.[22] April 30 (Bloomberg) -- SAP AG, the world's biggest maker of business-management software, reported its steepest quarterly profit decline in almost six years on acquisition-related costs and a weaker dollar.[14] Frankfurt - European software giant SAP AG reported Wednesday a 22-per-cent fall in first-quarter profits on acquisition- related costs and despite higher sales.[27]
The 15 percent rise in software and software-related service sales, SAP's key metric, was less than the market had expected.[24]
SAP said it will "engage with significantly less than 1,000 customers" on the service in 2008. The company said it is cutting its investment in the project for this year by about 100 million Euros; beginning in 2009, the company says, there will be no further "accelerated investments."[32] SAP sees revenues for the full year up 24%-27%. SAP said it is shifting its rollout strategy for the ByDesign service "to ensure a more focused and controlled ramp-up process."[32]
German applications-maker SAP has announced that the release of its first software-as-a-service (SaaS) offering, Business ByDesign, originally slated for the second half of 2008, will be delayed by at least a year.[21] Three months later, at an analyst event in Boston, an executive said only, "There are more." "It's much more important that we make the solution perfect, to reach the lowest total cost of ownership and make Business ByDesign ready this year," Kagermann said.[30] To do that, SAP will take more time to optimize the end-to-end process of selling, delivering and running Business ByDesign, Kagermann added.[26] "We need to make certain we make enough profit from it. Here we need to improve - there are too many manual steps in the hosting environment," he said. Moving the application to SAP's NetWeaver architecture would help with this, he added. As part of the modified roll-out strategy, SAP will reduce its marketing and development spending on Business ByDesign by approximately '100m in 2008, which would improve its overall margin by about 1%.[23] A1S, later renamed Business ByDesign, then became SAP's commitment to a full on-demand ERP suite. Targeted at midsized companies with between 100 and 500 employees, its pricing starts at $149 per user per month.[30] With no comparable products in the market, SAP felt it could afford more time to get Business ByDesign right.[23] Because of the delay SAP will invest 100m less than expected in Business ByDesign.[19]
AOL's Ad Revenue Rises Slightly as Income Drops AOL saw only a slight gain in its online advertising business for the first quarter of 2008, suggesting the company has a way. [1] More graphics chips were sold in the first quarter of 2008 than in the final three months of 2007 - the first time the business has seen sequential grow between the quarters spanning the New Year since 2002.[19]
In a press call to announce the German software company's first quarter results, Kagermann explained: "We need to take additional steps of optimising the process of delivering and selling the system."[23] "The U.S. market in the first quarter was tougher than expected," Chief Executive Henning Kagermann told a conference call for journalists.[24] One analyst raised concerns about an 18% drop (according to U.S. GAAP) in operating income to '359m for the first quarter.[23]
The company also reported non-GAAP income from continuing operations of 345 million euros, up 8% from 319 million euros in the prior-year quarter. [5] The latest quarter results fell well short of the consensus estimate of 336 million Euros.[32]
In Euros, revenues declined to 30.43 million euros from 30.45 million euros in the comparable period last year.[16] Quarterly revenues reached $46.06 million, up from $40.04 million in the same quarter a year ago.[16]
Total revenues grew 14% to euro 2.46 billion from euro 2.16 billion a year earlier.[16] Total revenue also missed consensus, rising to 2.460 billion euros, less than the 2.520 billion euros expected.[4]
SAP dropped as much as 1.4 euros, or 4.2 percent, to 31.65 euros in Frankfurt trading. Before today, SAP had lost 7 percent this year in Frankfurt trading, less than the 15 percent slide in the benchmark DAX Index. [14] At 11.31 a.m., shares of SAP were down 1.45 euros or 4.38 percent at 31.60 euros, while the DAX index was at 6,884.42 points, down 0.88 points or 0.01 percent.[4] SAP shares traded flat at 32.96 euros at 0854 GMT, broadly in line with the German blue-chip DAX index.GDAXI.[10]
SAP closed Tuesday's trade at $52.45, up $1.25, on a volume of 5.11 million shares.[5]
In May, Oracle agreed to buy product lifecycle management software maker Agile Software Corp. for about $495 million.[5] Some other deals included MetaSolv Software Inc. and Stellent Inc. In April, Oracle completed its acquisition of business-intelligence software maker Hyperion Solutions Corp. for $3.3 billion.[5] Since the end of 2004, Oracle has spent more than $25 billion on more than 30 acquisitions. In January 2005, the company completed its $11.1 billion purchase of PeopleSoft after a prolonged takeover battle.[5]
BEA Systems repeatedly rejected oracle's initial offer of $17 per share in October, saying it was worth much more than that, but Oracle continued to approach BEA. Finally, in January, BEA Systems agreed to be acquired by Oracle for a sweetened price of $19.375 per share in cash or about $8.5 billion.[5] Net income per share rose to 277.71 yen from 244.96 yen in the previous year.[16] Earnings per share were down 19 per cent compared to last year to 21 cents per share.[19]
SAP's commitment to the on-demand or Software as a Service (SaaS) market has been erratic. It initially dismissed the delivery model pioneered by companies like NetSuite Inc. and Salesforce.com, only to build an on-demand CRM application two years ago. With that development, SAP acknowledged the difficulty customers had deploying its existing CRM application and encroachment by Salesforce.com, which was selling small CRM deployments into its own customer base. [30] SAP will not reach its goal of 1,000 customer engagements this year, he added.[30]
Many of SAP's customers are in the United States and the dollar has slid in value against the euro by nearly 5 percent in the last three months.[12]
The figure came in below the 298 million euros consensus of eight analysts' forecasts polled by Thomson Financial News. [2] Our network comprises business and financial news web sites read by millions of business decision-makers around the world. Barron's is America's premier financial magazine, renowned for its market-moving stories and in-depth reporting.[32] "We are bringing out a new product, and a new business model," Kagermann said.[23] "The good news was that we closed 50% of our business in U.S. from new customers," Kagermann said.[31]
An SAP developer told a German newspaper last week that the software was suffering from performance problems and bugs. "We decided this is the right time to adjust the pace," Kagermann said.[30] Kagermann said that SAP is in no rush to deploy the product more widely until it is sure it can deliver it profitably. "We have to work out how expensive it will be for SAP if we run this product in a hosted environment. We have to make sure we make enough money with the product," he said.[26]
Kagermann ran SAP with company co-founder Hasso Plattner before Plattner moved to the supervisory board in 2003.[14]
The company launched the software, which is aimed at companies with 100-500 employees, in a test phase last year. [25] First-quarter software and software-related service revenue climbed 14.6 percent, while software revenue rose 10.7 percent, missing estimates calling for an increase of nearly 23 percent.[4] Analysts were expecting revenue of $3.96 billion, according to Thomson Financial.[31] Oracle is keen in gobbling up companies as part of boosting revenue growth and expanding market share.[5]
Net income fell by 22% to $376 million (242 million euros), vs. $481.7 million (310 million euros) in the year-ago period. [31] There will be no further accelerated investments beginning in 2009, the company noted. The company now expects full-year 2008 non-GAAP operating margin at constant currencies to be in the range of 28.5% - 29%, compared to its previous outlook range of 27.5% - 28% and 27.3% recorded in fiscal 2007.[5] In July, Oracle reached a deal to buy identity theft and fraud prevention software maker Bharosa Inc. for an undisclosed sum. Oracle's biggest catch this year was enterprise infrastructure software maker BEA Systems.[5]
SOURCES
1. PC World - Business Center: SAP Cuts Investment in Business ByDesign as Net Income Falls
2. SAP Q1 drops 22 pct as costs related to Business ByDesign launch surge UPDATE - Forbes.com
3. Germany's SAP says earnings down ahead of product launch - INQUIRER.net, Philippine News for Filipinos
4. ROUNDUP SAP Q1 results, Business ByDesign launch delay disappoint investors | Latest News | News | Hemscott
5. RTTNews - Global Business News, Business Newswires, Business Articles, News Analysis.
6. SAP Profit Falls More than Expected, Shares Sink - Software * Technology * News * Story - MSNBC.com
7. SAP Delays Product Rollout After Weak Q1
8. SAP delays hosted software targets by 12-18 months | Markets | Markets News | Reuters
9. SAP co-CEO says maintains expectations for U.S. ops UPDATE - Forbes.com
10. SAP product woes endanger mid-term targets - paper | Markets | Markets News | Reuters
11. Slowdown Fears Sock SAP - Forbes.com
12. The Associated Press: SAP's 1Q net slips to $376.82 million on buyout, weak dollar
13. Techworld.com - SAP cuts investment in hosted service for SMBs
14. Bloomberg.com: Germany
15. The Local - SAP posts weak earnings and delays product launch
16. RTTNews - Quick facts Articles, Positive EPS Surprises, News Analysis, Earnings, Audio News.
17. ITPro: Information Management: News: SAP profits fall 22 per cent
18. SAP remains totally committed to Business ByDesign product - CEO UPDATE | Latest News | News | Hemscott
19. SAP reports profits drop, delays ByDesign rollout | Channel Register
20. SAP Puts Brakes on Business ByDesign Rollout - Headline Watch
21. SAP delays SaaS offering by a year | Information Age
22. SAP hit by falling US dollar | smh.com.au
23. SAP delays roll-out of hosted Business ByDesign system - 29 Apr 2008
24. UPDATE 4-Weak US sales hit SAP Q1; new software delayed | Reuters
25. SAP may have to delay market launch of ByDesign software - report - Forbes.com
26. UPDATE ' Software provider SAP hurt by charges related to purchase of Business Objects: CFO
27. SAP's profits falls despite higher sales - Business
28. SAP Q1 software and related services 1.736 bln eur | Industries | Technology, Media & Telecommunications | Reuters
29. SAP business software launch tripped up: report
30. SAP delays on-demand ERP
31. SAP Slips on U.S. Sluggishness | Software | CRM MSFT ORCL SAP - TheStreet.com
32. Tech Trader Daily - Barron's Online : SAP Q1 Disappoints; Stock Falls In Early Trading
33. Free Preview - WSJ.com
34. SAP CEO sees no signs of spending slowdown - CNBC | Industries | Technology, Media & Telecommunications | Reuters
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