SAP plans job cuts, despite solid earnings

Fourth quarter showed gains in revenue and income, but the software maker says it sees the 2009 operating environment as "challenging."

Even coming off a healthy quarter, business software titan SAP says it needs to cut costs for the coming year--and as elsewhere in the tech sector, that means job cuts.

SAP said Wednesday that for the fourth quarter, it had net income of 850 million euros ($1.1 billion) on revenue of 3.5 billion euros. Those figures represent a gain of 13 percent in net income and 8 percent in revenue year over year.

Revenue in software and software-related services at the Walldorf, Germany-based company was 2.7 billion euros, up 8 percent year over year.

For the full year, SAP's net income was 1.89 billion euros, down 2 percent from 2007, while revenue was 11.57 billion euros, up 13 percent.

But a troubling and unpredictable economic climate means that SAP , like many other companies inside and outside of high tech, will continue tightening its belt. SAP said Wednesday that it plans to trim its worldwide workforce by about 3,000 positions by the end of 2009--from 51,500 down to 48,500 jobs.

SAP said that the job cuts, at least some of which it expects to come through attrition, will lead to annual savings of 300 million euros to 350 million euros starting in 2010.

Here's how SAP sees the business environment for the coming year:

The Company expects the 2009 operating environment to remain challenging. In addition, 2009 will no longer include the positive effects from the acquisition of Business Objects , and the 2009 first-half results will be a difficult comparison to the strong results reported in the first half of 2008, which was prior to the economic crisis that disrupted the global markets in the third quarter of 2008.

For those reasons, SAP did not provide a specific outlook for software and software-related service revenue for full-year 2009.

About the author

Jonathan Skillings is managing editor of CNET News, based in the Boston bureau. He's been with CNET since 2000, after a decade in tech journalism at the IDG News Service, PC Week, and an AS/400 magazine. He's also been a soldier and a schoolteacher, and will always be a die-hard fan of jazz, the brassier the better.


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