SAP: World Doesn't Revolve Around Sun

SAP is focusing on its own strategy, rather than worrying about Oracle's Sun acquisition.
Publish date:

German software giant


(SAP) - Get Report

has no intention of changing its game plan to counter


(ORCL) - Get Report




Sun Microsystems


, according to Werner Brandt, the company's chief financial officer.

Speaking at the UBS Global Technology and Services conference in New York early Wednesday, the finance chief promised that SAP would not make any knee-jerk reactions in response to Oracle.

"We're focusing on our strategy -- we have said that we do not see the need to change our strategy moving forward," he said. "We have to see how this acquisition evolves over time -- it's too early to speculate how it will impact the competitive environment."

Oracle's recent

$7.4 billion

acquisition of Sun sent shockwaves through the software sector, even prompting


that SAP itself could become acquisition bait. By adding its database software to Sun's Java, Solaris, MySQL and server technology, Oracle could pose a serious threat to both SAP and


(IBM) - Get Report

, completely altering the tech landscape.

Brandt nonetheless acknowledged that his firm will be closely monitoring the progress of the Oracle/Sun combo during the coming months.

"Oracle now becomes a serious competitor to IBM, and we have to watch it carefully over the next quarters," he said.

SAP is also a major user of Sun's Java technology, and Brandt was questioned about the possibility of Oracle raising the cost of Java licenses.

"We have just extended our contract with Sun for four years some months ago," he replied. "From that perspective, I think we have a clear contractual situation -- I assume that Oracle will adhere to this contract."

As for SAP's own M&A agenda, Brandt promised that this has not been impacted by the tough economy.

"It's very important to think now about our way forward," he said. "Our overall strategy has not changed -- it's organic growth supported by acquisitions."

Brandt said that SAP has its eye on mid-market firms and technology companies in areas such as public sector and financial services, but he would not divulge specifics.

"I am sure that we will get the financing," he said. "Don't forget that we generate more than $2 billion in cash on an annual basis."

The exec added that he would never rule out another acquisition on the scale of SAP's $4 billion deal for

Business Objects

but said that the firm typically spends $400 million to $600 million on M&A annually.

SAP, which is the world's biggest maker of business-management software, has felt the strain of the global economic crisis. The Walldorf, Germany-based firm saw its software revenue fall 33% during its recent

first quarter

, in what it described as a "difficult operating environment."

Brandt was unwilling to discuss specifics of the firm's current quarter during the UBS conference.

"Visibility is very limited, and I wouldn't want to start speculation about the second quarter," he said. "It's too early to talk about margins for Q2, beyond what we said for the full year."

The company, which is looking to boost recurring revenue through its software subscription, has stated that it expects a 2009 non-GAAP operating margin of 24.5% to 25.5%.