SAP Sees Profits Drop 15% - InformationWeek

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SAP Sees Profits Drop 15%

Enterprise applications vendor SAP is slowing down. Thecompany announced yesterday that pretax profit for thefourth quarter of 1998, ended Dec. 31, dropped 15%, to$421 million (DM 712 million), compared with the same periodlast year. Total revenue for the quarter was $1.5 billion(DM 2.59 billion), an increase of 18% against the fourthquarter of 1997. Before this quarter, for the past severalyears, the company has had quarterly growth rates ofanywhere from 40% to 100%.

Perhaps most telling, product revenue for the quarter grewonly 2%, to $957 million (DM 1.62 billion), over the sameperiod last year. These numbers are consistent with theoverall downturn in demand for ERP applications. SAPofficials said that while performance in the Americasand Europe remained strong, profit growth was seriouslyaffected by a sales decline in Japan.

Total sales in 1998 grew 41%, to $5.05 billion (DM 8.47billion), over the previous year, while operating profitincreased 15% to $1.14 billion (DM 1.92 billion). Revenuein the Americas increased 28% to $709 million (DM 1.20billion), while sales in Europe, the Middle East, and Africagrew 20% to $692 million (DM 1.17 billion). In the Asia-Pacific region, revenue fell 22% to $135 million (DM 228million).

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