Enteprise effect: SAP says business turmoil hurting its revenue
Associated Press -- Manufacturing Business Technology, 10/8/2008 12:52:00 PM
FRANKFURT, Germany - Shares of SAP AG plunged Monday after the business software maker said it saw a sudden drop in business at the end of September as global financial turmoil escalated.
"The market developments of the past several weeks have been dramatic and worrying to many businesses," Henning Kagermann, the co-chief executive of the company, said in a statement.
"These concerns triggered a very sudden and unexpected drop in business activity at the end of the quarter," he added. "Unfortunately, SAP was not immune from the economic and financial crisis that has enveloped the markets in the second half of September, causing us to report numbers below our expectations."
SAP said it expects software and software-related service revenues for the July-September period to come in between 1.97 billion and 1.98 billion euros, or $2.66 billion to $2.67 billion. That is up about 13 percent from the third quarter of 2007, but SAP said in July it expected the figure to increase between 24 percent and 27 percent for the year.
SAP made its announcement after its shares closed down more than 16 percent in a broadly lower Frankfurt market. SAP's U.S. shares fell $5.97, 13.1 percent, to $39.68 Monday.
The company is due to report its full results for the quarter on Oct. 28.
Shares of SAP's biggest rival, Oracle Corp., also got hit Monday, falling $1.18, 6.1 percent, to $18.30. In its most recent update, on Sept. 18, Oracle said it expects to withstand the financial chaos and predicted software sales growth of 5 percent to 15 percent in its current fiscal quarter, which ends Nov. 30.
The financial crisis has worsened since Oracle offered that update, but that doesn't necessarily mean Oracle will have to alter its sales targets. Many big deals typically close toward the end of the quarter, which means Oracle could find it easier to make some sales next month if the economic jitters subside in the next few weeks.
