Apotheker Out As SAP CEO

Leo Apotheker has stepped down as CEO of SAP and the struggling software giant has named Bill McDermott and Jim Hagemann Snabe as new co-CEOs, the company said late Sunday.

The Walldorf, Germany-based company said its Supervisory Board "reached a mutual agreement" with Apotheker "not to extend his contract as a member of the SAP Executive Board" and Apotheker has resigned as CEO effective immediately.

Apotheker, who has worked at SAP for more than 20 years, was promoted to co-CEO with Henning Kagermann in April 2008 and then became CEO in May 2009 when Kagermann retired.

SAP has been hard-hit by the worldwide recession and the company has struggled to maintain profitability and sales growth. For fiscal 2009 ended Dec. 31 the company reported an 8 percent plunge in sales to 10.7 billion Euros from 11.6 billion Euros in 2008. Net income dropped 4 percent to 1.79 billion Euros from 1.87 billion Euros in 2008.

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The decline in profitability came despite cuts in SAP's global workforce by 3,000 or 5.8 percent last year. One year ago company executives predicted software and software-related sales would be down 1 percent in 2009: Software and software-related sales actually dropped 3 percent for the year while sales of software licenses plummeted 28 percent.

SAP did not give a specific reason for Apotheker's departure. The statement said the company's Supervisory Board "thanks Leo Apotheker for his enormous contribution to the success of SAP ... and wishes him all the best for the future."

Naming McDermott and Hagemann Snabe as co-CEOs returns the company to the management structure the company operated under before Kagermann retired.

"The new setup of the SAP Executive Board will allow SAP to better align product innovation with customer needs. The new leadership team will continue to drive forward SAP's strategy and focus on profitable growth, and will deliver its innovations in 2010 to expand SAP's leadership of the business software market," said Hasso Plattner, SAP co-founder and chairman of the SAP Supervisory Board, in a statement.

McDermott is currently head of SAP's sales and field organization while Hagemann Snabe is head of product development: Both are already members of the SAP Executive Board.

A report from the Wedbush Securities financial services firm noted that sales/field operations and product development are areas of SAP "that have been under significant pressure over the last few years due to soft business conditions and less than completely successful product releases."

SAP, for example, has struggled to make its SAP Business-by-Demand on-demand application set widely available to customers, despite debuting the product in September 2007.

SAP also said it had named CTO Vishal Sikka to the SAP Executive Board. The company indicated that Plattner would take on a more active role in managing the company, saying he will "continue to play a strong role in advising the new leaders on technology and product development."