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Thứ Hai, 20 tháng 1, 2014

SAP Delays Profitability Target Amid Cloud Push - Bloomberg

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SAP AG (SAP), the largest maker of business-management software, pushed back its profitability target by two years as it shifts sales efforts from traditional license business to programs delivered over the Internet.


The company said operating profit adjusted for some items will probably reach 35 percent of sales by 2017 rather than in 2015 as previously projected. Analysts had predicted SAP would miss the 2015 profitability target, reaching 34.1 percent by that time, according to estimates compiled by Bloomberg.


As more companies access software via the Web instead of installing programs on their own premises, Walldorf, Germany-based SAP needs to strike a balance between pushing its cloud software and safeguarding its mainstay license business. A stronger focus on on-demand software promises more revenue in the future but dents profitability in the short run because of high fixed costs of maintaining server farms for clients.


“We have bold ambitions in the cloud,” co-Chief Executive Officer Bill McDermott said on a call with newswires. “We choose not to harvest the margin in the short run but to go for share in the cloud.”


The company also set new revenue targets for 2017. It projects total revenue to reach at least 22 billion euros ($30 billion) that year and cloud revenue to be 3 billion euros to 3.5 billion euros. SAP may make acquisitions to help reach its cloud revenue targets, McDermott said.


This year, earnings excluding some items, or what the company calls non-IFRS operating profit, will probably reach 5.8 billion euros to 6 billion euros, compared with the average analyst estimate of 6.06 billion euros. Revenue from software and software-related services, adjusted for some items, will grow 6 percent to 8 percent in 2014 following four years of double-digit growth. All forecasts assume constant exchange rates, SAP said.


SAP on Jan. 10 reported a decline in license sales as a strengthening euro reduced earnings in markets around the world. SAP’s fastest-growing product, the Hana data-processing engine, fell short of the company’s annual guidance for 2013 because of currency effects.


Research firm Gartner Inc. projected this month that the global enterprise-software market will grow 6.8 percent to about $320 billion this year, after a 5.2 percent gain in 2013. That pace would keep it as the fastest-growing segment of the information-technology industry, according to Gartner.


SAP shares fell less than 0.1 percent to 60.65 euros yesterday, valuing the company at 74.5 billion euros. The stock rose 2.7 percent last year. The German company’s biggest rival, Redwood City, California-based Oracle Corp. (ORCL), added 15 percent.


To contact the reporter on this story: Cornelius Rahn in Berlin at crahn2@bloomberg.net


To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net







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