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Technology / AI and automation

SAP optimistic for 2004

Although the company was negatively hit by currency conversion rates, which took some of the shine of its results, SAP remains bullish.

Net income for fourth quarter came in at 423 euros ($538m) compared to 474m euros ($602m) last year, representing a 3% fall but a 3.5% increase based on constant currency. At 931m euros ($1.2m), software revenue was also down 3% on the year, but was up 3.5% on constant currency rates. Total revenue was 2.2bn euros ($2.8bn), down 3% on the year ago figure, but up 4% at constant currency rates.

For the full year net income was a record 1.1bn euros ($1.4bn), from 509m euros ($647m) in 2002, which was a 6% increase. SAP was hit by a 297m euro ($377m) impairment charge resulting from its investment in ailing Commerce One Inc. Software revenue came in at 2.1bn euros ($2.67bn), down 6% compared to the previous year but up 1% at constant currency. Total revenue was 7.0bn euros ($8.9bn), down 5% year on year, or up 3% at constant currency.

The company is optimistic about 2004, believing growth will return to the market, which is fuelling its hopes for a 10% increase in software revenue, noting that sales in the US increased significantly over the year and that EMEA showed increased levels of activity during the quarter. SAP’s optimism echoes the cautious words of Tom Siebel from Siebel Systems Inc earlier this month.

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The America’s region showed the greatest rate of improvement, with software revenues up 23% year on year, and the US segment the leading subsector within the region, indicating the reorganization SAP undertook over the last year is starting to pay off.

The Asia-Pacific region was also a good performer, with software sales up 11% at constant currency rates. EMEA was weak for much of the year but demonstrated an improvement during the fourth quarter, when software revenues increased 2%, or 3% at constant currency rate.

Although the results are positive overall, there are a few areas of concern. Although down 14% year on year, sales of Financial and HR software was still the largest contributor to overall software sales, contributing 801m euros ($1.02bn) of the overall annual software revenue total of 2.1bn euros ($2.67bn).

Sales of SAP’s newer software such as CRM, which represents much of the potential for future growth for the company, were also down. CRM sales declined by 7% compared to last year to $440m euros ($559m); PLM dropped by 8%. SCM sales increased by 3% and the catch category of BI, EP, SRM and Marketplaces grew by 5%.

The breakdown suggests customers are opting to upgrade older versions in ways that bring limited additional software revenue to SAP and are upgrading to 4.6c or SAP Enterprise rather than mySAP.

This article is based on material originally published by ComputerWire
This article is from the CBROnline archive: some formatting and images may not be present.

CBR Staff Writer

CBR Online legacy content.