Quarterly earnings from SAP fell short of expectations yesterday, showing the German business software maker failed to keep up with arch-rival Oracle Corp and sending its shares sharply lower.
SAP’s results, released more than a week before they had been scheduled, showed group revenue rose 12 per cent to €5.06 billion, below an average analyst forecast of €5.17 billion.
Operating profit rose slower than revenue, up 10 per cent to €1.96 billion, resulting in SAP’s operating margin narrowing by 0.8 percentage points to 38.8 per cent in the three months to the end of December.
The figures contrasted with those of Oracle, the world’s number three software maker and SAP’s biggest competitor, which last month forecast strong sales for 2013 after posting a 17 per cent jump in quarterly software revenue.
SAP shares were down 3.8 per cent and were the biggest decliners in a 2 per cent weaker sector index yesterday. The stock fell as low as €57.77, its lowest in two months.
SAP said its operating profit was affected by investments in web-based software products, also known as “cloud” businesses. The company, along with IBM and Oracle, are betting on faster-growing, web-based software products, which are less vulnerable to the economic downturn as there are no upfront costs for programme licences, dedicated hardware or installation.
SAP last year splashed out $7.7 billion to buy internet-based computing companies Ariba and SuccessFactors. The web-based services garnered just €342 million in 2012 revenues, a fraction of the total €16.3 billion.
With a market capitalisation of $100 billion, SAP is the second-most valuable company in the German blue chip index behind Volkswagen, which is worth $105 billion.
SAP is due to publish full financial results and a full-year outlook on January 23rd. Some analysts fear the outlook could also disappoint. – (Reuters)
