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SAP upbeat about 2010 depite 2009 declines

Warwick Ashford

Enterprise software maker SAP has announced drops in income for both the final quarter of 2009 and the year as a whole following reduced corporate spending during the recession.

Fourth-quarter net income was €727m, 12% lower than the same period the year before, while annual net income slid to €1.7bn, a 4% decline on the previous year.

The fourth-quarter income was €9m below average analyst predictions, according to Bloomberg.

But Léo Apotheker, chief executive at SAP, said in a statement that the company is ready to return to top-line growth, as well as margin expansion for 2010.

"Despite the difficult environment last year, we never lost focus on innovation, which is the cornerstone for growth going forward," he said.

SAP predicts software and software-related services revenue will increase between 4% to 8% from 2009, while operating margin is expected to be up between 30% and 31%, compared with 27.4% in 2009.

Werner Brandt, chief financial officer at SAP, said the company's plan to reduce operating expenses since the third quarter of 2008 had exceeded expectations.

"In 2009, we significantly reduced Non-GAAP operating expenses by around €650m to €7.8bn despite restructuring costs of approximately €200m," he said.

Brandt said SAP will continue to maintain strict cost controls in 2010 with a spotlight on further margin expansion, but analysts said the company may have to offset further losses of income after SAP's u-turn on a single, higher-cost software maintenance programme this month.

SAP announced it would re-introduce a lower-priced standard support package after months of negotiations with SAP user groups unhappy about the lack of choice in maintenance plans.


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