SAP Warns of Q4 Sales Slowdown

SAP’s stock dropped more than 10 percent on Thursday as the business software vendor warned of lower-than-expected revenue growth for its most recent quarter.

Just three months ago, SAP reported that demand for its products was growing at a breakneck pace, and the company predicted that it would report software revenue growth somewhere between 15 percent and 17 percent for 2006. On Thursday, however, it warned that this number would be closer to 13.5 percent.

Fourth-quarter revenue is expected to be about 2.95 billion euros (US$3.82 billion), a year-over-year increase of 7 percent. Software revenue was up 7 percent for the quarter, totaling about 1.26 billion euros, the company said.

Software sales slowed in the Americas and Asia-Pacific regions, SAP reported. In the United States and Japan, sales dropped to a 4 percent growth rate during the fourth quarter. The enterprise software vendor reported 13 percent revenue growth in the Europe, Middle East and Africa region.

SAP is expected to provide guidance for 2007’s outlook and announce detailed fourth-quarter 2006 results on Jan. 24.

SAP’s shares on the New York Stock Exchange (SAP) closed at $48.50 Thursday, down more than 10 percent from the previous day’s $54.13 close.

-Robert McMillan, IDG News Service (San Francisco Bureau)

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• IT in 2007: A Look Ahead

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