SAP Feels Tug of U.S. Slowdown

German software giant SAP AG is finally feeling the effects of the slumping U.S. economy.

SAP on Thursday announced third quarter financial results that showed respectable earnings but flat operating income and declining software license revenues.

In the quarter ended Sept. 30, SAP revenues rose to about $1.5 billion -- 16 percent more than the $1.28 billion that the Waldorf, Germany, enterprise resource planning software developer reported in the third quarter of 2000. License revenues were down 7 percent to $403 million.

Operating income was $181 million, slightly more than it was in the same period of 2000. Net income for the third quarter was $70 million, or $9 million less than was reported in Q3 2000.

Net income was adjusted for the costs of SAPs acquisition of TopTier Software Inc. and what the company calls the Commerce One impact (in August, SAP increased its investment in business-to-business software maker Commerce One Inc. so that it now owns 20 percent of the Pleasanton, Calif., company.)

SAPs earnings per share were reported at about 23 cents, versus the 25 cents per share reported for the third quarter last year.

Hasso Plattner, co-chairman and co-CEO of SAP, said in a press release that recently the company has seen significant changes in the software market, particularly in the U.S., with customers postponing decision on software purchases.

Due to changes in corporate software spending timetables SAP updated its full year outlook. Officials now see full year revenues growing by around 15 percent. SAP had previously predicted a 20 percent growth in income for the year.

Officials said SAP will accelerate cost reduction measurements, including "adjusting the levels and mix" of its employees, particularly in the U.S.

SAP officials plan to grow company business in the areas such as Customer Relationship Management and Supply Chain Management. Software revenues related to mySAP CRM grew to $70 million, about 17 percent of total software license sales, and mySAP SCM revenues were posted at about $88 million, or 22 percent of licensed sales.