SAP profits drop in uncertain conditions

Software behemoth sees double digit profit decline for 2008's first nine months as co-chief executive calls for 'greater efficiencies.'

Software giant SAP has seen net profit for 2008's first nine months drop 11 per cent on 2007, despite a 15 per cent revenue spike.

The company's turnover for the three months to the end of September, based on Generally Accepted Accounting Principles (GAAP), was up 14 per cent year-on-year to €2.761bn. GAAP Net income for the period was €388m, a drop of five per cent on Q2 2007. Software and software-related service revenues were the firm's key growth area as revenue swelled 15 per cent to €1.994bn.

For the first nine months of the year, GAAP revenue was up 15 per cent to €8.079bn while net profit dropped off 11 per cent to €1.038bn. Co-chief executive Henning Kagermann said: “The third quarter 2008 was SAP’s 19th consecutive quarter of double-digit growth in software and software-related service revenues at constant currencies. This was an achievement in a period where the global financial crisis had a significant impact on customer decisions towards quarter end.

"Customers are continuing to spend on our products but the economic and business environment is uncertain. Our business model is flexible, and we are focusing on protecting our operating margins and earnings. We are assessing business activity continuously, and we are balancing the need for greater efficiencies with steady advancements in our products, customer services and technologies, while addressing customers’ most critical business issues.

"This approach has worked well for customers and SAP throughout the up and down economic cycles of the past, and has contributed to SAP’s market leadership. We have been through uncertainty before, and have always emerged as a better, stronger and more efficient company.”