SAP lowers forecast, cites sales slump
Business software giant SAP is lowering its 1999 revenues forecast due to slower than expected sales.
SAP's board of directors said the firm will not be able to meet its original revenues growth forecast of 20 to 25 percent, and will cut its revenues target to 15 to 20 percent for the year.
SAP fell 5 percent at the open, down 2 points at 36.94. The company's announcement also drove down stocks of competing business software makers. Peoplesoft dipped slightly while Baan lost nearly three percent.
The company also said it is expecting a lower pretax profit margin compared to last year's 21.6 percent, which would depend on software revenues in the fourth quarter. SAP originally anticipated an improvement in its pretax profit margin of up to 1 percent.
SAP said it will be able to achieve the new lowered revenues target for 1999 based on a strong fourth-quarter sales pipeline and increasingly positive response among customers surrounding its Internet product, mySAP.com, which was launched last month at the company's U.S. user conference.
SAP is banking on mySAP.com to help it expand its stake in the business-to-business e-commerce market and build a large global network of business buyers and sellers online.
SAP competes against rivals Oracle, Baan, and PeopleSoft in the enterprise resource planning software market--software that automates a company's back office system, or human resources, financials, and manufacturing.
Oracle, in particular, has taken a more aggressive stance in markets where it competes with SAP.
Shares of SAP, which trades on the German DAX in addition to the American markets, fell more than 5 percent in early trading. The news also sent Dutch firm Baan tumbling 5.13 percent at 12.95 euros in early trading.
Last quarter, SAP said second-quarter profit fell 7 percent as companies cut back orders to address their Year 2000 problems. SAP said profit fell to $146 million from $158.27 million a year earlier.
SAP will offer more detailed information in its third-quarter results announcement slated for October 20.