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SAP slumps on 'lackluster' sales

Weak Asia markets; 'pent-up demand'

SAP slumps on 'lackluster' sales

 FILE - In this  Jan. 23, 2013 file picture CEOs Jim Hagemann Snabe and Bill McDermott, right, pose for photographers prior to a press conference in Walldorf, southwestern Germany. The co-CEO of business software maker SAP AG says its push into cloud computing is starting to make money  and could be heading for profits that rival or exceed those of its traditional software business.   Bill McDermott told The Associated Press Friday April 19, 2013  that "we accelerated into the cloud in a big way about a year ago and already we´re making money on it."  (AP Photo/dpa, Uwe Anspach, File)
FILE - In this Jan. 23, 2013 file picture CEOs Jim Hagemann Snabe and Bill McDermott, right, pose for photographers prior to a press conference in Walldorf, southwestern Germany. The co-CEO of business software maker SAP AG says its push into cloud computing is starting to make money and could be heading for profits that rival or exceed those of its traditional software business. Bill McDermott told The Associated Press Friday April 19, 2013 that "we accelerated into the cloud in a big way about a year ago and already we're making money on it." (AP Photo/dpa, Uwe Anspach, File)

Shares of SAP AG, the German business-software giant whose U.S. headquarters is in Newtown Square, slipped as much as 5%, to below $75 a share, in early trading today after the company reported sales of just $3.6 billion (vs. expected $3.8 billion) due to lower-than-expected licensed-software and support sales.

The "lackluster" results and "subpar performance was a clear disappointment," but stronger cloud-computing and HANA database sales should still be "good enough to keep the stock at current levels" once the initial reaction dissipates, analyst Yun Kim told clients at Janney Capital Markets. 

SAP blamed slow sales in Asia for the shortfall, after blaming weak American sales last quarter.But co-CEO Bill McDermott told investors Asia sales are likely to recover this year after new government leaders take over in China and India. He later noted that government spending uncertainty continues in the U.S., but added that "there is a lot of pent-up demand," and confirmed the company expects to maintain its operating profit margin of at least 35%.

Joseph N. DiStefano
About this blog

PhillyDeals posts raw drafts and updates of Joseph N. DiStefano's columns and stories about Philly-area finance, investment, commercial real estate, tech, hiring and public spending, which he's been writing since 1989, mostly for the Philadelphia Inquirer.

DiStefano studied economics, history and a little engineering at Penn, taught writing at St. Joe's, and has written the book Comcasted, more than a thousand columns, and thousands of articles, and raised six children with his wife, who is a saint.

Reach Joseph N. at JoeD@phillynews.com or 215 854 5194.

Joseph N. DiStefano
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