SAP reveals tough first half but views future with optimism

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SAP reveals tough first half but views future with optimism

Simon Quicke

SAP has indicated that despite the tough economic conditions it is improving its visibility of the future and the market is starting to show signs of stabilisation.

The enterprise software firm made the comments as it released its Q2 results, which showed that non-GAAP software revenues continued to be hit with a 40% decline and service revenues had dipped by 5%.

Non-GAAP revenues dipped by 10% from €2.9bn to €2.5bn, but operating income remained flat and there were only slight drops in net income, down from €494m to €473m. Things might have been brighter, but operating income was hit by a €5m charge connected to staff reduction costs.

SAP's senior management have been consistently realistic about the state of the market, often seeing the share price hit as a result of the honesty, so comments made by the CEO Leo Apotheker carry some weight.

"While the operating environment remains difficult, we are beginning to have improved visibility into the second half of the year," he said, and in comments reported by Reuters went further, telling a German TV news station the worst could be over.

One of the moves SAP made early on was to start to trim costs with recruitment freezes and scrutiny of travel and expenses budgets and Werner Brandt, CFO of SAP, said that it would be maintaining "tight cost controls in all areas of the company".

For the first six months of its fiscal year SAP saw software revenues decline on a non-GAAP basis by 37% and services drop by 5% and total revenues drop by 8% from €5.4bn to €4.9bn. Net income fell from €834m to €736m.

Sap rules out further job cuts >>

This story originally appeared on MicroScope.co.uk.


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