Bruised SAP cuts 3,000 jobs as profit disappoints

Margins squeezed, workforce trimmed

SAP is slashing 3,000 jobs worldwide to cut costs, as its 2008 net profit fell two per cent after the economy plunged late last year.

The German software giant, which is the world’s largest provider of biz apps, also declined to give a specific outlook for 2009 sales.

SAP boss Leo Apotheker said that for the year ahead he expected to see “limited visibility, making it increasingly difficult to project sales in this environment”.

The Walldorf-based company gave no target for its key software and software-related sales for 2009. Instead it based its margin forecasts on the assumption core sales would be flat or one per cent lower than 2008 sales of €8.62bn.

It pulled in a net income of €850m on revenue of €3.5bn for the fourth quarter ended 31 December 2008, compared to revs of €3.25bn for the same period in 2007.

Sales in software and software-related services were up eight per cent to €2.7bn compared to the same period a year earlier.

SAP’s full year net income, however, was down two per cent from 2007 to €1.89bn for the year, while revenue grew 13 per cent to €11.57bn from €10.26bn in its 2007 Q4.

And it’s that profit drop that has forced SAP, like so many other tech companies to wield the axe in an effort to put a cap on spending at the firm.

By the end of 2009 the company, which currently employs 51,500 staff worldwide, will cut its workforce by about 3,000 positions. SAP hopes to make annual savings of €300m to €350m starting in 2010.

“This is not the first time we have experienced tough economic times and we believe we are well-prepared to endure it,” said Apotheker.

“With competitive products, a solid business model, a high percentage of recurring revenues and flexibility in the cost base, we expect to emerge from this challenging environment a stronger and more competitive company, while maintaining a firm hold on our industry leading position.”

SAP’s decision to cut jobs and hold back profit forecasts for the rest of the fiscal year follows similar declarations made by Microsoft last week when the software titan said it would trim its global workforce by 5,000. ®