SAP posts healthy results, but will shed 3,000 jobs

Despite a good year and healthy fourth quarter, the German software company plans to cut staff in the tough economic climate
Written by Colin Barker, Contributor

SAP, one of the world's largest software-application companies, on Wednesday released healthy results for its fourth quarter, but said it plans to cut 3,000 staff in the face of tough economic times.

In its preliminary quarterly results, SAP said its software and software-related services revenue increased by eight percent year-on-year. However, revenue from software fell seven percent, from €141bn (£131bn) to €132bn.

The German software maker also issued financial results for all of 2008. For the full year, software and software-related services revenue rose by 14 percent, while software revenue alone was up by six percent. Yearly net income was €188bn, down two percent.

The results were something of a positive note for SAP, which in October withheld its revenue outlook for the year because of the uncertainty of the economic climate.

In announcing the job cuts, co-chief executive Léo Apotheker said in a statement that SAP "intends to reduce its workforce globally to 48,500 [from 51,500] positions by [the end of] 2009", a drop of 3,000 posts. The company didn't say where the cuts would be made, but noted that "all countries... will contribute in some way".

The first six months of 2008 had been successful for the company, Apotheker said, noting it had started with "strong organic growth" and "an excellent contribution from Business Objects", which SAP bought in October 2007.

Tim Payne, a senior analyst at research firm Gartner, agreed that the purchase of the business-intelligence software specialist had proved very successful for the company. "SAP has had a lot of success in winning over people who were Business Objects customers," he told ZDNet UK.

According to Payne, SAP has had success in finding income in other areas. "Their figures show that they are having success in getting people to pay up on their software licences," he said. "Auditing and compliance is important for them."

SAP has been actively checking the level of software use by customers through online checks and comparing these with the licences held, Payne said. Where there is a discrepancy, SAP makes sure the customer pays for the undeclared use.

"SAP is not alone in this," Payne said. "Oracle and other software companies are going through the same process of auditing and customers notice when their software runs slower as it is being checked."

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