SAP Reports Less-than-Expected Third Quarter Revenue

Posted 10/28/2009 at 11:04am | by Paul Lilly

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SAP, the multinational software development and consulting firm headquartered in Germany, reported a bigger-than-expected drop in third quarter revenue in its earnings announcement today.

Somewhat offsetting the disappointing performance were lower tax rates and better profit margins, both of which led to a 12 percent rise in net income. But this came as little consolation to investors, as SAP also reported a 31 percent decline in software revenue. SAP adjusted its sales forecast for 2009 and now expects revenue to drop anywhere from 6 to 8 percent.

SAP also caught fire from Oracle last month after Oracle reported weaker-than-expected sales of new software licenses, which Oracle blamed on SAP's weakness as a reseller of its products.

Putting a positive spin on the sobering numbers, SAP chief executive Leo Apotheker pointed out gains in his company's volume business and multi-year agreements.

"Despite the continued tough spending environment, we are pleased to see further progress in the evolution of our volume business as a result of smaller deals," Apotheker said. "In addition, we are driving more multi-year agreements, where customers buy and consume software over many periods, which we believe is a positive transition for both SAP and our customers."

Image Credit: BusinessWeek