Menu
SAP warns on Q3 earnings, cites economy

SAP warns on Q3 earnings, cites economy

SAP warned Monday that its Q3 sales would fall short of expectations due to the weak economy.

Turmoil in the world's stock markets over the past several weeks and resulting concern among customers caused "a very sudden and unexpected drop in business activity" at the end of SAP's third fiscal quarter, the company said Monday.

SAP now anticipates that third-quarter revenue will be between 1.97 and 1.98 billion euros, a 13 percent to 14 percent increase over the same quarter in 2007 but less than it expected.

SAP is still finalizing its third-quarter numbers and plans to provide more details on Oct. 28.

The company felt it would meet earnings expectations through most of the third quarter but the "dramatic acceleration of the financial and economic crisis" that befell the financial markets during the second half of September undid those predictions, co-CEO Henning Kagermann said during a conference call.

"We executed well during most of the third quarter," he added. "That predictability disappeared once the financial crisis accelerated dramatically. ... It has had a strong impact on our ability to sign contracts. Many customers expressed the need to focus on shorter-term concerns and put planned IT investments on hold for now."

Kagermann stressed that SAP's business overall remains strong.

But he also revealed that the company is taking cost-cutting measures, including a hiring freeze that includes not replacing workers who leave SAP, as well as a reduction in the number of temporary workers.

"I want to just emphasize that these are sensible steps in an uncertain time. We are not cutting out or downsizing," Kagermann said.

SAP's share price fell roughly 15 percent on the news Monday, to about US$39 in afternoon trading. Rival Oracle's took a tumble as well, falling about 10 percent to $17.75.


Follow Us

Join the newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.

Featured

Slideshows

Meet the leading customer-centric Microsoft channel partners

Meet the leading customer-centric Microsoft channel partners

Microsoft honoured leading partners across the channel following a year of customer innovation and market growth in New Zealand. The 2018 Microsoft Partner Awards recognised excellence within the context of the end-user, spanning a host of emerging and established providers.

Meet the leading customer-centric Microsoft channel partners
Reseller News launches new-look Awards at 2018 Judges’ Lunch

Reseller News launches new-look Awards at 2018 Judges’ Lunch

Introducing the Reseller News Innovation Awards, launched to the channel at the 2018 Judges’ Lunch in Auckland. With more than 70 judges now part of the voting panel, the new-look awards will reflect the changing dynamics of the channel, recognising excellence across customer value and innovation - spanning start-ups, partners, distributors and vendors.

Reseller News launches new-look Awards at 2018 Judges’ Lunch
Show Comments