SAP cuts revenue guidance on Asia slowdown
Source: totaltele.com View: 266 Date: 2013-07-19

German software maker’s revenue also hit by transition to cloud model.

German business-software maker SAP AG on Thursday cut revenue guidance for its main business as a result of weakening demand in Asia. It confirmed its profit forecast.

Revenue from software and software-related services will grow at least 10% this year, SAP said. It had previously predicted an increase of between 11% and 13%.

An economic slowdown in China is discouraging companies in the entire Asia-Pacific region and hampers their investment spending, SAP joint Chief Executive Jim Hagemann Snabe said in a said in a conference call with journalists.

A transition to Internet-based or cloud applications has contributed to the lower software revenue expectation, SAP added.

A forecast for full-year operating profit of between 5.85 billion euros ($7.66 billion) and EUR5.95 billion was maintained.

The forecasts are adjusted for exchange-rate swings and don’t comply with international financial reporting standards.

SAP net profit rose 10% on year to EUR724 million in the second quarter as revenue increased 4% to EUR4.06 billion. Software and cloud-subscription sales--a closely watched gauge for future service revenue--rose 3% to EUR1.14 billion.

SAP recently introduced cloud and high-speed analytics applications which contributed to company growth. SAP introduced a combination of main business software applications with super-fast database access in January and later added a cloud version. Cloud subscription and support revenue tripled to EUR159 million in the April-to-June period.

The guidance comes after Accenture PLC cut its revenue forecast and SAP’s main competitor Oracle reported a 1% increase in revenue for software licenses and cloud subscriptions for the March-to-May period.

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