SAP warns on corporate spending drop

by Editor 10/8/2008 3:37:00 PM
SAP, Europe's leading software company and global leader in business management software, has warned software implementation companies about the effects of the global financial crisis, saying that some of their biggest corporate customers are holding off spending.

Even though SAP's revenue was bigger than last year, the German company said that its third quarter earnings were "below our expectations." SAP shares dropped more than 15 percent after the warning.

SAP chief executive Henning Kagermann said that the recent developments in the market "have been dramatic and worrying to many businesses... These concerns triggered a very sudden and unexpected drop in business activity at the end of the quarter."

The company expects the revenues from software and related services for the period from July to September to amount to between €1.97 and €1.98 billion, which is about 13 percent more than last year and a more moderate increase than expected.

"Unfortunately, SAP was not immune from the economic and financial crisis that has enveloped the markets in the second half of September, causing us to report numbers below our expectations," Kagermann said.

The news may end up having a cascading effect on UK's IT and IT services companies which help businesses implement SAP software.

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