SAP Sees Unexpected Slump in Revenue

by Abhinna Shreshtha    Oct 08, 2008

Business software provider - SAP, has reported that the ongoing financial crisis has lead to a drop in its software and software-related services revenue in the closing weeks of September.

Speaking at a conference call for financial analysts, Henning Kagermann, co-CEO of SAP said the company could not overcome the sudden change in the economic environment seen in the second half of September. Kaggerman has termed the acceleration in the financial crisis as ‘unexpected and unusual in its suddenness’.

Though SAP has still reported double-digit growth in sales, Kaggerman said customers expressed the need to focus on short term investments and put planned IT investments on hold. “The market developments of the past several weeks have been dramatic and worrying to many businesses. These concerns triggered a very sudden and unexpected drop in business activity at the end of the quarter,” said Kagermann. “Throughout the third quarter we felt quite positive about our ability to meet our expectations. Unfortunately, SAP was not immune from the economic and financial crisis that has enveloped the markets in the second half of September, causing us to report numbers below our expectations.”

On Monday, SAP released a preliminary review of its 2008 third quarter revenues. It expects Q3 2008 U.S. GAAP software and software-related service revenues to be between 1.970 billion and 1.980 billion, representing an increase of 13% - 14% compared to the third quarter of 2007. Non-GAAP software and software-related service revenues are expected to see an increase of 16% - 17% compared to the third quarter of 2007. The company has said that complete Q3 2008 results, along with total revenues and operating income, will be released on October 28.