SAP reports profits drop, delays ByDesign rollout
SAP has increased revenues for the first quarter of this year, but net income has fallen and it is delaying the rollout of its webhosted business management product.
Results for the first quarter ended 31 March 2008 show revenues up 14 per cent to €2.46bn, but net income is down 22 per cent to €242m, compared to €310m for the same period of 2007.
The company is delaying rollout of its Business ByDesign product - an online software-as-a-service aimed at small and medium businesses. For this year it will concentrate on six countries, and it predicts it will take a year to a year and half longer than expected to get to €1bn revenues and 10,000 customers. It expects to have less than 1,000 customers this year. Because of the delay SAP will invest €100m less than expected in Business ByDesign.
Earnings per share were down 19 per cent compared to last year to 21 cents per share.
SAP shares fell by just over three per cent on the news.
Henning Kagermann, joint CEO at SAP, said: “Our growth strategy, which comprises three pillars – the established business, the midmarket and the business user solutions - is working quite well." He said adoption of ERP 6.0 is exceeding expectations and the midmarket is growing well, with over 1,570 customers added in the quarter. ®