Skip to main content

Software Revenue Falls at Germany's SAP

The world's biggest maker of business-management software reported a decline in first-quarter net income as software revenue fell 33%.

Updated from 1:41 a.m. EDT




, the world's biggest maker of business-management software, reported a decline in first-quarter net income as software revenue fell 33% in what the company called a "difficult operating environment."

Earnings in the first quarter were 204 million euros ($269.5 million) compared with 242 million euros a year earlier. Total revenue fell slightly to 2.4 billion euros from 2.46 billion euros.

Software revenue in the quarter fell to 418 million euros from 622 million euros. The decrease, the company said in a statement Wednesday, is the "result of the difficult operating environment worldwide due to the global economic downturn, and the tough comparison to the first quarter of 2008."

SAP said it expects the 2009 operating environment to remain "challenging," while the second quarter will be a "difficult comparison" to the year-earlier quarter.

"Due to the continued uncertainty surrounding the economic and business environment, SAP will not provide a specific outlook for software and software-related service revenues for the full-year 2009," the company said Wednesday.

"While visibility for software revenues remains limited, we continue to take the necessary steps to protect our margin in this tough operating environment," said Leo Apotheker, co-CEO of SAP.

"The cost containment measures that we initiated in October of last year and carried into the first quarter of 2009 have really taken hold, and we are pleased with the resulting margin performance. We will continue to maintain tight cost controls. Our ability to deliver good margin performance in this environment, especially when you consider the restructuring charges related to the reduction of positions, is due to the strength, flexibility and scalability of our business model," Apotheker said.

SAP said it will continue with the cost-saving measures that it initiated in October 2008 and will take further steps to reduce expenses, including maintaining tight cost controls on all variable expenses, including third-party related costs, as well as capital expenditures.

SAP recorded 160 million euros in restructuring charges resulting from work force reductions during the first quarter. It said those charges are expected to amount to between 200 million euros to 300 million euros for the year.

Copyright 2008 Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed. AP contributed to this report.