SAP sales miss target
Fourth quarter sees slowdown in U.S. license sales, as the business software maker deals with weak dollar and strong competition from Oracle.
The software maker said Thursday that fourth-quarter licence sales--which are key to future service and maintenance revenue--were about 1.26 billion euros ($1.63 billion), less than the 1.35 billion euros average forecast in a Reuters poll of 23 analysts.
For all of 2006, licence sales grew 11 percent, or 13.5 percent in constant currency. That's far short of the goal the company set of 15 percent to 17 percent in constant-currency growth.
SAP gave no reason in its preliminary results statement for the weaker performance. The company, the world's biggest maker of business software, faces increasingly fierce competition from U.S.- based archrival Oracle.
However, it said its licence sales in the United States--its traditional sales driver--grew just 4 percent, or 15 percent at constant currencies. That compares with growth of 15 percent, or 20 percent at constant currencies, in the third quarter.
SAP makes much of its revenues in U.S. dollars, but has a large cost base in the euro zone, meaning the strong euro hurt its results.
But the company said its share of the core enterprise applications market rose 3 percentage points year-on-year, to about 24.2 percent at the end of 2006.
Oracle, a database specialist, has spent billions of dollars buying companies in the faster-growing software applications sector in recent years to better challenge SAP on its own ground, but that strategy is as yet unproven.
SAP shares closed down 10.5 percent at $48.50 in New York.