German software giant SAP on Thursday announced preliminary fourth quarter and full-year financial results that were less than stellar but somewhat better than analysts had predicted in light of the global economic downturn in 2009.
Company officials said an early scan of its fourth quarter figures shows a 9 percent decline in total sales to 3.18 billion euros, or $4.6 billion dollars, down from 3.49 billion euros in the same quarter of last year.
For the fourth quarter, SAP (NYSE: SAP) said it software and software-related service revenue fell 5 percent on an adjusted basis, with software sales checking in at 1.11 billion euros — slightly better than the 987 million euros predicted by Wall Street analysts.
SAP shares dipped $0.18 to $50.21 in Thursday afternoon trading. SAP will release its official fourth quarter and year-end results on Jan. 27.
The company’s overall operating income margin fell to 32.8 percent in the quarter, down 4 percent points from the year-ago quarter and far less impressive than arch-rival Oracle’s surprisingly solid second-quarter results last month.
Total sales for 2009 checked in at 10.66 billion euros, an 8 percent dip from the 11.57 billion euros it recorded in 2008. Sales from software and software-related services fell 3 percent to 8.19 billion euros, however SAP originally projected a 6 percent to 8 percent decline.
While shareholders may be nonplussed by the preliminary quarterly and year-end results, customers will certainly be interested in SAP’s about-face in the way it offers customers support to enterprise clients.
SAP on Thursday said it will now offer a tiered support model that will give customers the opportunity to choose the support program best suited for their needs rather than locking them into SAP’s expensive and comprehensive Enterprise Support service.
Customers can now choose either the Enterprise Support service package or SAP’s cheaper Standard Support package. Also, SAP said it will not move forward its planned price increase for existing Enterprise Support contracts.
“This tiered maintenance model will allow customers choice in the SAP support model,” said Nils Niehoerfter, an analyst at RAAD Research. “By providing different support options, simplifying the pricing structure, and giving a level of predictability to budget planning, SAP is helping its customers make decisions based on their business requirements.”
Finally, SAP announced a handful of personnel changes at the executive level.
John Schwarz will now be in charge of “industry and solution management” while Jim Hagemann Snabe will be in charge of product design and development.
The company said Steve Watts will become the new president of Asia Pacific Japan, replacing Geraldine McBride who’s leaving the firm. Michael Kleinemeier will assume responsibility for Germany, Austria and Switzerland as managing director, replacing Volker Merk, who has taken a sabbatical. Kleinemeier and Garrett Ilg, president of SAP Japan, will directly report to Bill McDermott.
