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SAP's Retail News Beside the Point

So far this week, SAP has issued three separate press releases touting software deals with leading retailers. Sure, the news is a natural byproduct of this week's National Retail Federation Convention and Expo in New York City, but SAP shareholders probably couldn't care less.

Not that Big Lots and 7-Eleven and even Grupo Pao de Acucar (the largest retailer in Brazil in case you didn't know) aren't important customer wins. But with Oracle breathing down its throat and the stock stuck in a prolonged malaise-- down a couple bucks a share from this time last year-- it's going to take more than Big Lots to get investors, customers and wandering-eye employees excited about the company's prospects.

On Monday, SAP announced preliminary fourth-quarter and year-end results that, at first glance, appear pretty good. Total sales were up 10 percent for the year-ago quarter to $4.9 billion and software and services-related sales rose 14 percent for the quarter.

That's all well and good but operating margins-- a key metric for any company-- declined mainly because the company was spending so much money ramping up its new SaaS vehicle, Business ByDesign.

Many analysts, financial and industry alike, have bemoaned SAP's move downstream, arguing it will eventually either cannibalize its bread-and-butter installed ERP business or not provide enough functionality to make it worthwhile to the SMB crowd.

CEO Henning Kagermann is in Palo Alto this week and will be holding something akin to a State of SAP address with media types Wednesday morning. It will be interesting to see what he has to say-- or not-- about Business ByDesign.

 

 

 

 

Grupo Pao de Acucar

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