SAP Pleased With Performance

By Renee Boucher Ferguson  |  Posted 2003-01-30 Print this article Print

Total revenues for the fourth quarter were down 2 percent, but for the year, up 1 percent.

Enterprise resource planning software giant SAP AG for the most part bested the tech slump with its preliminary fourth quarter and full year 2002 earnings reported Thursday. SAP, of Waldorf, Germany, reported in increase of 1 percent for total revenues for the year 2002—to $8 billion from $7.92 billion the previous year. The company also reported a 15 percent increase in operating income in 2002, up from $1.63 billion in 2001 to $1.85 billion in 2002. License revenues for the year, however, were down. SAP reported license revenues for 2002 at $2.5 billion, down from $2.8 billion in 2001.
The decrease in license revenues was not all bad news for the company, which reported a significant gain in market share for this past year.
Based on license revenues, SAP gained 9 percentage points in market share, up to 50 percent from 2001s 41 percent, company officials said. Net income for the year was down significantly, from $631 million in 2001 to $553 million in 2002. Henning Kagermann, co-chairman and CEO of SAP, said in a statement, "We are pleased with our performance—we executed well despite the unsettled environment." Kagermann said SAP improved its profitability through targeted cost management in overhead and third-party expenses that created a leaner organization. As for fourth-quarter results, total revenues for the quarter were down 2 percent, from $2.52 billion for the quarter ended Dec. 31, 2001, to $2.48 billion for the same period in 2002. Kagermann said the company continued to see the trend for smaller deal sizes during the fourth quarter. However, net income for the 2002 quarter increased to $514 million, up from $346 million for the same period last year. One of a handful of companies to break out earnings by product category, SAP said revenues related to mySAP CRM were up 5 percent, from $215 million in fourth-quarter 2001 to $222 million for the same quarter this year. Revenues from mySAP SCM, however, were posted at $202 million—down 20 percent from a 2001 high of $252 million. Regarding guidance for 2003, SAP officials said that despite the unpredictable political and economic climate, through continued cost containment the company expects to increase its operating margin by about 1 percent.

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