SAP Q1 Software Sales Plunge 33 Percent
"While visibility for software revenues remains limited, we continue to take the necessary steps to protect our margin in this tough operating environment," said SAP co-CEO Leo Apotheker in a statement. "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."
SAP executives refused to provide sales forecasts for the current quarter.
For the first quarter ended March 31, SAP reported total revenue of nearly 2.40 billion euros ($3.18 billion), down 2.6 percent from 2.46 billion euros ($3.26) in the same period one year earlier. Net income fell nearly 16 percent to 204 million euros ($270 million) from earnings of 242 million euros ($321 million) one year ago.
Software sales in the first quarter declined 33 percent to 418 million euros ($553.8 million) from 622 million euros ($824.1 million) one year earlier. Combined revenue from software sales and software-related services was essentially flat at 1.74 billion euros ($2.3 billion).
SAP's sales were down 5 percent in Europe, the Middle East and Africa and down 6 percent in Asia-Pacific. But sales were up 3 percent in the Americas.
In January, after reporting a drop in software sales in its fourth quarter last year, SAP said it would cut its worldwide workforce by 3,000 this year through attrition and layoffs. During the first quarter the company eliminated 1,620 jobs—a majority of them in the Americas—bringing its total workforce below 50,000.
Many of the cuts were in professional services and sales and marketing operations, according to the company, but jobs were also cut in research and development, general administration, infrastructure, and software and software-related services.
The cuts are likely to continue this quarter given the company's stated headcount goals and the fact that SAP took a one-time charge of 160 million euros to cover the cost of eliminating 2,200 positions.
SAP's consolidation is in contrast to archrival Oracle which earlier this month said it would acquire Sun Microsystems for $7.4 billion, a move that will expand Oracle's software product portfolio and even make the vendor a competitor in computer and storage hardware markets.