SAP hit by share setback

SAP’s share price tumbled six per cent last week following the release of preliminary second-quarter results showing lower than expected growth in software licence revenue.

The software giant reported that revenue is expected to be ¤2.2bn (£1.5bn), up nine per cent on last year, and operating income is expected to grow by 13 per cent to about ¤558m (£384m) with an estimated operating margin of 25.4 per cent.

But revenue from software licences increased by just 10 per cent to ¤621m (£427m), well below analysts’ expectations of about ¤675m (£464m)

‘For the first time, chief executive Henning Kagermann had to admit market share losses to arch rivals Oracle and Microsoft,’ said Ovum analyst Cornelia Wels-Maug. ‘He stated that internal research pointed to a one to two per cent loss in market share, but it isn’t possible to determine the exact gain in market share to either competitor.’

US software revenue grew about 20 per cent, but European software revenue is estimated to rise by just three per cent. In Asia-Pacific revenue rose by four per cent.

‘Home market Germany lived up to expectations, but delays in signing software contracts in the UK, Switzerland and some Nordic countries have resulted in lower than expected revenue in the European region,’ said Wels-Maug. ‘However, SAP’s healthy order book makes for good business prospects.’

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