SAP earnings fall short of expectations
By Harro Ten Wolde | January 16, 2013 4:42 AM EST
Quarterly earnings from SAP AG fell short of expectations on Tuesday, showing the German business software maker failed to keep up with arch-rival Oracle Corp and sending its shares sharply lower.
SAP's results, released more than a week before they had been scheduled, showed group revenue rose 12 percent to 5.06 billion euros ($6.8 billion), below an average analyst forecast of 5.17 billion, according to Reuters data.
Operating profit rose more slowly than revenue, gaining 10 percent to 1.96 billion euros, resulting in SAP's operating margin narrowing by 0.8 percentage points to 38.8 percent in the three months through December.
The figures contrasted with those of Oracle, the world's No. 3 software maker and SAP's biggest competitor, which last month forecast strong sales for 2013 after posting a 17 percent jump in quarterly software revenue.
SAP shares were down 3.8 percent and were the biggest decliners in a 2 percent weaker sector index by 1500 GMT. The stock fell as low as 57.77 euros, its lowest in two months.
"Especially after their main competitor Oracle managed to beat estimates last month, many had hoped that SAP would follow suit," said Markus Huber, head of German trading at ETX Capital.
"Even by missing estimates by a very small margin, and despite having had an overall excellent 2012, investors are venting their disappointment by dumping the stock heavily," Huber added.
SAP said its operating profit was affected by investments in web-based software products, also known as "cloud" businesses.
The Walldorf, southern Germany-based company, along with peers such as IBM and Oracle, are betting on faster-growing, web-based software products, which are less vulnerable to the economic downturn as there are no upfront costs for program licenses, dedicated hardware or installation.
SAP last year splashed out $7.7 billion to buy internet-based computing companies Ariba and SuccessFactors.
The web-based services garnered just 342 million euros in 2012 revenues, a fraction of the total 16.3 billion.
With a market capitalization of $100 billion, SAP is the second-most valuable company in the German blue chip index behind Volkswagen, which is worth $105 billion, according to Reuters data.
SAP is due to publish full financial results and a full-year outlook on January 23. Some analysts fear the 2013 outlook could also disappoint.
"Guidance could be slightly below current consensus and expectations may be revised lower," Barclays analyst Gerardus Vos said in a note.
SAP's full-year operating profit at constant currencies reached 5.02 billion euros, missing its own guidance for at least 5.05 billion euros.
($1 = 0.7482 euros)
(Additional reporting by Maria Sheahan; Editing by David Holmes)
Most Popular Slideshows
- Pope Francis Meets Sudanese Woman Who Was Spared Death for Apostasy (PHOTOS)
- Malaysia Airlines Flight MH17: King Williem-Alexander, Queen Maxima Hold Solemn Reception Ceremony for Victims
- Jennifer Lawrence & Nicholas Hoult Allegedly Split: Mad Max Actor Cheats with Kristen Stewart & Riley Keough - Reports
- Transfer News: FC Barcelona Shockingly Sign Valencia Defender [PHOTOS]
Join the Conversation
- Tourre on stand says email in SEC case 'not accurate'
- Syrian authorities blocking access to needy in Homs - Red Cross
- Faith in European Union at low ebb, EU poll says
- Former UBS banker gets 18 months, $1 million fine, for muni bid-rigging scheme
- U.S. judge halts challenges to Detroit's bankruptcy bid
- Apple iPhone 6 on Two Confirmed Release Dates, New Parts Leaked Suggesting Bigger iPhone to Come
- Xiaomi Mi4 vs OnePlusOne vs Nexus 5: Mi4 is the ‘Perfect’ Phone
- Israeli Women Stripping Naked for IDF Soldiers
- Google Nexus 6, 8 with Android L on Release Date Promises Killer Mobile Device Experience
- HTC One M8 Android 4.4.3 KitKat Update Roll Out, Introducing the HTC One Remix
- Shocking Video of Pedigree Dog Culling in Bali Emerges [Video]
- Sony Xperia Z3 Specs Leaked with More Killer Features Ahead of Samsung Galaxy Note 4, iPhone 6