The tech sector is reeling after business application giant SAP reported a “sudden” drop in sales in the second half of September.

The German goliath admitted revenues for its fiscal third quarter would pull up short of expectations, sparking a 16 per cent drop in its share price – the biggest fall for 12 years.

Henning Kagermann, co-chief executive of SAP, said in a statement: “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.”

SAP’s arch-rival Oracle saw a 6.1 per cent drop in its share price, with Microsoft among the other tech stocks hit.

Kagerman said SAP had been “quite positive” about its ability to meet expectations throughout most of the third quarter.

“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,” he said.

SAP expects third quarter US GAAP software and software-related revenues to rise by between 13 and 14 per cent to €1.97bn to €1.98bn.