FT.com / Companies / Media & internet - SAP falls on static full-year forecast

FT.com / Companies / Media & internet - SAP falls on static full-year forecast

SAP falls on static full-year forecast
By Gerrit Wiesmann in Frankfurt

Published: October 18 2007 23:56 | Last updated: October 18 2007 23:56

Shares in Germany’s SAP dropped Thursday after it shied away from raising its full-year forecast even after a solid nine months’ business.

SAP stock closed 3.3 per cent lower at €38.29 after reporting that software sales rose 11 per cent – or 15 per cent at constant currencies – to €715m in the third quarter, while operating income rose 9 per cent to €601m.

Although these figures were in line with analysts’ expectations, investors were rattled by SAP’s refusal to raise its full-year forecast. They now fear the world’s largest maker of business software is preparing for a weaker-than-expected Christmas quarter.

The company’s share price was under pressure last week after it caught investors off guard in announcing the €4.8bn ($6.8bn) takeover of rival Business Objects, a move many saw as an end to a strategy of organic growth.

Henning Kagermann, chief executive, said he expected full-year revenue from software and software-related services to grow at the upper end of the forecast range of 12 per cent to 14 per cent in constant currencies.

Given that growth in the first nine months of the year reached 16 per cent, analysts at Citibank lamented that “implied growth” of about 10 per cent in the all-important fourth quarter looked disappointingly conservative.

The company did not reach its targets in the final quarter last year, a clear sign of the dangers it faces as it tried to broaden its product scope from a saturated market for supplying software to the world’s biggest companies.

In July, August and September, SAP saw overall sales rise 9 per cent – 13 per cent at constant currencies – to €2.4bn. It said it had gained one point in market share and now held 27 per cent.

Copyright The Financial Times Limited 2007