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Thứ Ba, 21 tháng 1, 2014

SAP pushes back profitability target in favour of cloud expansion - IFA Magazine

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German software group SAP announced that it will push back its profitability targets by two years as it aims for online services to become a larger piece of the pie.


Specifically, the group now aims for operating margin to reach 35% in 2017 compared to the earlier target of 2015. It also expects earnings of EUR5.8 – EUR6bn in 2014 compared to an earlier estimate of EUR6.06bn. Software and services revenue are expected to rise by 6-8% after years of double-digit growth.


Analysts were already predicting that the group would miss its 2015 profitability target, with estimates compiled by Bloomberg pointing to profitability of 34.1% by next year.


SAP expects total revenue to hit EUR20bn in 2015 with EUR2bn coming from services on the ‘cloud’ (compared to EUR950m-EUR1bn in 2014). For 2017, it expects to reach total revenue of EUR22bn, of which EUR3-EUR3.5bn would be from the ‘cloud’.


With more companies offering software via the Web, SAP is searching to expand its cloud-software offerings while safeguarding its flagship products, based on business software licenses.


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


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