SAP Finishes Off Tough Year With Losing Quarter - InformationWeek

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Software // Enterprise Applications

SAP Finishes Off Tough Year With Losing Quarter

Revenue fell for the quarter and full year, but company officials expect a better year in 2004.

Last year's tough economic conditions took a toll on SAP. The German software maker's 2003 revenue fell 5% to $8.93 billion from $9.42 billion the year before. For its fourth quarter ended Dec. 31, 2003, revenue was $2.82 billion, down 3% from $2.89 billion the same time a year ago.

But SAP executives predict that 2004 will be better. The company expects software revenue to increase by around 10% compared with 2003. Software revenue in 2003 dropped to $2.73 billion from $2.91 billion in 2002.

In a statement detailing the company's financials, CEO Henning Kagermann said new software, such as SAP's NetWeaver, and the company's leadership position in the enterprise software market, have "prepared us well for 2004. We believe 2004 will demonstrate the continuation of a trend that we saw evolve in the second half of 2003: clear signs that companies started picking up the pace of their software investments."

The weaker U.S. dollar had a role in SAP's lackluster sales. The company's fourth-quarter software revenue was $1.18 billion, down 3% from $1.22 billion in the same period a year ago. But excluding the effects of the weaker dollar, software revenue increased by 3.5%, SAP said.

Fourth-quarter net income dropped 11% to $537.8 million, down from $602.6 million in the year-ago quarter. Sales of SAP's legacy products--financial and human-resources applications--were down 14% year-over-year. But the company did see growth in sales for its supply-chain management apps (up 3%) and business-intelligence, enterprise portal, supplier-relationship management, and marketplace apps, which grew 14%.

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