SAP's 1Q net slips to $377 million
BERLIN—Software maker SAP AG said Wednesday its profit fell 22 percent in the first quarter because of the weaker dollar and costs associated with an acquisition, but sales rose and the company lifted its 2008 outlook.
SAP, whose programs help companies do back-office work such as payroll, inventory management and accounting, said net profit for the January-March period fell to 242 million euros ($376.8 million) from 310 million euros a year earlier. That was lower that the 296 million euros ($460.9 million) that analysts surveyed by Dow Jones Newswires had forecast.
That sent SAP shares down 2 percent to close at 32.39 euros ($50.56) in Frankfurt.
Many of SAP's customers are in the United States, meaning it takes in revenue from them in dollars but still pays many costs in euros. The dollar lost more than 8 percent of its value against the euro in the first three months of 2008, and that pulled SAP's revenue down by $138 million ($214.4 million), SAP said, given that more than a fourth of its first-quarter sales were in the U.S.
SAP's total revenue rose 14 percent to 2.46 billion euros ($3.83 billion) from 2.1 billion euros a year ago, just above the 2.45 billion euros ($3.81 billion) analysts had forecast.
Software sales at the Walldorf-based company -- a closely watched barometer because it indicates future revenue from maintenance and consulting services -- rose 11 percent to 622 million euros ($968.5 million) from 562 million euros.
"Our growth strategy, which comprises three pillars -- the established business, the midmarket and the business user solutions -- is working quite well," Chief Executive Henning Kagermann said in a statement, adding that SAP's presence globally has helped it move forward.
The company said that its efforts to bring its subscription-based software Business ByDesign to six countries -- where it has early adopter customers -- would start this year, with more countries expected to follow in 2009.
"It is expected to take around 12 months to 18 months longer than the original 2010 target to reach the SAP Business ByDesign $1 billion revenue and 10,000 customer potential," SAP said. "However, the company will use SAP Business ByDesign innovations and technologies for the existing solutions and this will contribute significantly to the overall revenues of SAP in 2010."
SAP's 4.8 billion euros ($7 billion) purchase of French software company Business Objects, announced in October, was completed in February. Kagermann said SAP took a charge of 130 million euros ($202.9 million) on it.
Looking ahead, SAP said it expected 2008 software and software-related service revenue -- excluding the contribution from Business Objects -- to increase by 12 percent to 14 percent. It also said it planned to buy back another 250 million euros ($389.3 million) worth of its shares.
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