SAP sales drop but earnings rise

The sofware company attributed the earnings gain, amid the global economic downturn, to cost cuts and to stronger growth in its profit margin.

SAP on Wednesday reported a 4 percent gain in earnings for the second quarter despite lower sales.

For the quarter ended June 30, the business software giant netted 423 million euros ($600 million) compared with 408 million euros for 2008's second quarter. The company attributed the gain to cost cuts and to stronger growth in its profit margin, the net difference between sales and earnings.

"Despite the challenging economic conditions, the strength of our business model combined with a strong cost discipline has proven itself once again by enabling us to report another quarter of strong operating margin growth," said SAP Chief Financial Officer Werner Brandt.

Hurt by the global downturn, overall revenue dropped 10 percent to 2.6 billion euros from 2.9 billion euros a year ago. Software sales were hit especially hard, falling 40 percent to 543 million euros from 898 million euros in the year-ago quarter. SAP noted that 2008's second quarter was prior to the current economic recession.

SAP

Though the company didn't offer sales and earnings estimates for the full year, it did boost its forecast for operating margin for 2009. Excluding nonrecurring expenses, SAP now expects its annual operating margin to range from 25.5 percent to 27 percent, up from its earlier estimate of 24.5 percent to 25.5 percent, which it provided in its first-quarter report.

As part of its cost-cutting efforts, SAP announced earlier this year that it would slice about 3,000 jobs globally by the end of 2009.

The company has also been trying to expand its reach through acquisitions. In May, SAP picked up carbon management firm Clear Standards . Last week, it announced it would acquire SAF AG, a provider of global forecasting software for the retail market.

About the author

Journalist, software trainer, and Web developer Lance Whitney writes columns and reviews for CNET, Computer Shopper, Microsoft TechNet, and other technology sites. His first book, "Windows 8 Five Minutes at a Time," was published by Wiley & Sons in November 2012.

 

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