SAP sees Q3 revenues below expectations - update

(RTTNews) - German enterprise application software firm SAP AG (SAP | Quote | Chart | News | PowerRating) said on Monday that its preliminary software and software-related service revenues for the third quarter are below expectations. The company blamed the ongoing economic and financial crisis to its weak outlook. In addition, the company said it has appointed John Papandrea as senior vice president of the Healthcare industry business unit.

Henning Kagermann, Co-CEO of SAP, said, "The market developments of the past several weeks have been dramatic and worrying to many businesses. These concerns triggered a very sudden and unexpected drop in business activity at the end of the quarter."

For the third quarter, the company expects GAAP software and software-related service revenues to be between €1.970 billion and €1.980 billion, representing an increase of 13% - 14% from €1.74 billion in the third quarter of 2007.

Non-GAAP software and software-related service revenues, which exclude a non-recurring deferred support revenue write-down from the acquisition of Business Objects of around €40 million, is expected to be between €2.010 and €2.020 billion, compared to €1.74 billion last year. This represents an increase of 16% - 17%, and 20% - 21% at constant currencies, over the year-ago quarter.

The company anticipates third quarter GAAP software revenues in the range of €740 million to €750 million, representing an increase of 4% to 5% (7% - 9% at constant currencies), compared to €715 million in the third quarter of 2007.

Kagermann, said, "Throughout the third quarter we felt quite positive about our ability to meet our expectations. Unfortunately, SAP was not immune from the economic and financial crisis that has enveloped the markets in the second half of September, causing us to report numbers below our expectations."

On a U.S. GAAP basis, the Americas region is expected to report software and software-related service revenues growth of around 12% for the third quarter of 2008 compared to the third quarter of 2007.

For the third quarter, the Americas region is expected to report software and software-related service revenues growth of about 12% on a GAAP basis, and about 16% on a non-GAAP basis.

The company expects software and software-related service revenues from EMEA region to grow around 14% on a GAAP basis, and about 16% on a non-GAAP basis.

The APJ region is expected to report software and software-related service revenues growth of around 18% on a GAAP and non-GAAP basis.

For the nine months of 2008, SAP anticipates GAAP software and software-related service revenues in the range of €5.770 billion to €5.780 billion, and non-GAAP software and software-related service revenues of €5.910 billion to €5.920 billion.

The company said that it is still finalizing the quarter-end closing process, and hence total revenues and operating income are not yet available.

In another development, SAP said that it has appointed John Papandrea as senior vice president of the Healthcare industry business unit. Papandrea joins SAP from Deloitte Consulting, where he advised large healthcare organizations on information technology strategy, effective use of technology and technology innovation.

SAP stock is currently trading at $39.03, down $6.62 or 14.50% on a volume of 6.08 million shares.

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