SAP Revenues Rise on Increased Business IT Spending

 
 
By Nicholas Kolakowski  |  Posted 2010-07-27 Email Print this article Print
 
 
 
 
 
 
 

SAP reported rising software-related revenues and net profit, thanks to increased spending by business customers in the wake of a long-term global recession. SAP's recent Sybase acquisition positions it to make an aggressive play in the mobile-software market.

SAP benefited from increased spending on business software in the second quarter, reporting software and software-related revenues of 2.26 billion euro ($2.9 billion) and a net profit of 491 million euro ($638 million). Revenues experienced a year-over-year rise of 16 percent, while net profit rose 15 percent.

"Customers continue to invest for growth across large, midsized and small enterprises and within many industries," Bill McDermott, co-CEO of SAP, wrote in a July 27 statement. "We had outstanding growth in strategic markets like the U.S. and we saw continued double-digit growth in key emerging markets in Latin America and Asia. This solid performance is due to renewed customer confidence, an ever-expanding ecosystem, as well as focused execution on our go-to-market strategy."

Other players in business IT, including Microsoft, have seen revenues rise as both enterprises and SMBs open their wallets for software and hardware. On July 22, Microsoft reported fiscal fourth-quarter revenues of $16.04 billion, due at least in part to strong demand for Windows 7 and business products.

SAP announced July 27 that it had completed "the cash tender offer for all outstanding shares of common stock of Sybase," and that the latter will continue to operate as a separate company under current CEO John Chen. With the Sybase contribution taken into account, SAP expects its software and software-related service revenue for 2010 to increase between 9 and 11 percent. Without that Sybase contribution, SAP's business will grow between 6 and 8 percent.

SAP's $5.8 billion acquisition of Sybase, announced May 12, was widely regarded as the start of a potential paradigm shift in the enterprise-software landscape. In addition to helping SAP stay competitive with Oracle via new revenue streams, the deal offers a way for SAP to expand its mobile offerings via Sybase's technology.

"While SAP develops and delivers a wide range of enterprise business software solutions, Sybase's offerings are skewed toward the global mobile market," Pund-IT Research analyst Charles King wrote in a May 13 research note.

The deal marked SAP's largest acquisition since its $6.7 billion purchase of business intelligence software producer BusinessObjects in 2008. While SAP and Sybase had in the past collaborated on projects such as applications for the BlackBerry, which involved SAP layering functionality atop a Sybase mobile platform, the deal will see both functionality and platform consolidated under one roof.

With the increased prevalence of smartphones and other mobile devices within the enterprise, SAP sees developing for those platforms as key to its future growth.

"In the past 18 months, what we've been noticing is that device-specific experiences are the ones getting huge amounts of adoption," George Mathew, SAP's general vice president and general manager for Business Intelligence & In-Memory Analytics, said during a July 22 interview with eWEEK. "There is a real compelling strategy for us to create a minimum baseline for how BI content is more actively shared between devices; that's the starting point for creating device-specific experiences."

 
 
 
 
Nicholas Kolakowski is a staff editor at eWEEK, covering Microsoft and other companies in the enterprise space, as well as evolving technology such as tablet PCs. His work has appeared in The Washington Post, Playboy, WebMD, AARP the Magazine, AutoWeek, Washington City Paper, Trader Monthly, and Private Air. He lives in Brooklyn, New York.
 
 
 
 
 
 
 

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