SAP AG, the world’s biggest maker of business-management software, said sales will slide more than forecast this year as the economic slump forces clients to spend less, sending its stock to the biggest drop in a year.

SAP, which today reported a less-than-expected 12 percent increase in third-quarter profit, cut its sales outlook for the second time this year.
Software and related service revenue will fall between 6 percent and 8 percent in 2009 at constant currencies and excluding a write-down from acquiring Business Objects SA, it said in an e-mailed statement. In July, it had predicted a drop of 4 percent to 6 percent.
“These are really disappointing figures, much worse than expected,” said Ulf Moritzen, a fund manager at Aramea Asset Management AG in Hamburg, which oversees about $1 billion, including SAP shares. “Clients are obviously still reluctant to invest in software, so cost-cutting is the only option SAP has at the moment to safeguard profitability.”
Software sales suffered in the economic slowdown, as businesses put off spending to conserve cash. SAP customers include Apple Inc., Coca-Cola Co., and Wal-Mart Stores Inc. Last month, SAP’s biggest rival, Oracle Corp., reported sales, including revenue from acquired companies, slid 6.6 percent to $5.06 billion in the three months to Aug. 31.
SAP shares dropped as much as 7.7 percent to 31.77 euros in Frankfurt trading, the biggest decline since Oct. 28 last year, and stood at 32.40 euros as of 9:36 a.m. Before today, the stock had gained 36 percent this year.
“While we are seeing signs of stabilization in the general environment, the market remains difficult,” Chief Financial Officer Werner Brandt said in the statement.
Walldorf, Germany-based SAP’s net income rose in the third quarter to 435 million euros ($645 million), from 389 million euros a year earlier, the company said.
Sales slipped 9.2 percent to 2.51 billion euros. Net income had been seen at 454 million euros on sales of 2.63 billion euros, according to average estimates of analysts surveyed by Bloomberg.
“Third-quarter software and software-related service revenues came in lower than we expected mainly because of a particularly challenging environment in the emerging markets and Japan,” Brandt said.
Third-quarter non-Gaap revenue from software and related services fell to 1.94 billion euros from 2.04 billion euros a year earlier.
SAP reiterated its target for the full-year non-GAAP operating margin to be between 25.5 percent and 27 percent, excluding a write-down and charges for acquiring Business Objects. In the third quarter, the non-GAAP operating margin was 26.9 percent, compared with 26.1 percent a year earlier.
“This demonstrates our continued success in maintaining tight cost controls,” Brandt said.
SAP said earlier it would cut 3,000 jobs this year in the first redundancies since its foundation in 1972. Today, the company said it had cut 2,900 positions in the first nine months, leading to a restructuring charge of 186 million euros.
SAP, whose software is used by companies to manage tasks such as payroll, has said it could spend as much as 5 billion euros on takeovers to win market share from competitors, which include Redwood City, California-based Oracle.
In September, executive board member John Schwarz said the company would look for broader opportunities after the 4.8 billion-euro acquisition of Business Objects last year. Typically, the company has acquired small rivals to add pieces of software to existing products.
Oracle’s main growth strategy is through acquisition and it has bought 53 companies in four years.
(Source: Bloomberg)