SAP sees profit dwindle in first quarter

The business software maker reported a steeper-than-expected drop in its first quarter profits due to acquisition costs and the declining dollar.

Business software maker SAP on Wednesday reported a steeper-than-expected drop in its first-quarter profits, due mainly to acquisition costs and the slumping dollar.

The company said net income fell 22 percent to 242 million euros, or $376.7 million, from 310 million euros in the year-earlier quarter. The latest quarter included charges of 130 million euros related to the 4.8 billion euro acquisition of French software company Business Objects, Dow Jones reported on Thursday.

SAP Co-CEO Henning Kagermann. SAP

One bright spot, however, is software-license fees, a closely watched indicator of future maintenance-and-consulting revenue, which rose 11 percent to 622 million euros. Software and related service revenue rose 15 percent to 1.74 billion euros.

SAP has already said it will delay the rollout of Business ByDesign , its new on-demand software for big companies. That decision is likely to affect earnings later this year.

The company had predicted it would have 10,000 customers and $1 billion in revenue from Business ByDesign by 2010. On Wednesday, however, SAP said that it would take 12 to 18 months longer to achieve those goals.

SAP has traditionally served larger companies with its business management software and has more recently launched a plan to target smaller firms, through which it will compete with Microsoft, Salesforce.com, NetSuite, and other players.

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    Mike Ricciuti joined CNET in 1996. He is now CNET News' Boston-based executive editor and east coast bureau chief, serving as department editor for business technology and software covered by CNET News, Reviews, and Download.com. E-mail Mike.

     

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