SAP 2009 results down, but growth ahead

SAP has turned the corner says global operations president, with growth predicted for 2010

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SAP 2009 results down, but growth ahead Emerging markets such as BRIC and the MEA region contributed significantly to SAP's turnaround, says McDermott.
By  Mark Sutton Published  January 27, 2010

SAP today posted an 8% drop in revenues for financial year 2009, to euros 10.67 bn ($14.98bn) but says that it is on track for growth in 2010 after beating analyst expectations.

The software giant reported a 28% drop in software revenues to euros 2.61bn ($3.66bn), and a 3% drop in services revenues for the past year to euros 8.19bn ($11.5bn). Figures for the fourth quarter were also down, with revenues down 9% in total.

SAP said that global software sales exceeded analyst predictions by euros 200m, and the company forecasts a 4% to 8% growth in software and services revenues this year, as key markets return to growth, and the company capitalizes on operating expense savings of euros 650m ($913.7m).

Bill McDermott, president of Global Field Operations for SAP told "Overall we actually feel very good right now, because we have turned the corner. We now know that the markets around the world are turning - Germany, UK, US, Australia are all bell-wether markets for us and they all grew in the fourth quarter.

"We are focused on growth again, we see that our business is going to grow in 2010. Our customers are saying they can't save their way to success, it is time to grow again, so not only do they want us to help make them operationally efficient, but they also want us to talk about how they can have a multi-channel strategy for their customer, and how they can enter new markets, and be more agile and analytical in terms of business and business intelligence. The tone has shifted," he added.

Emerging markets played a significant role in the recovery, said McDermott, with Brazil, Russia, India and China showing a 46% year-on-year increase in combined software and software related services (SSRS) revenues, while the Middle East and Africa region was up by 84.1% in SSRS. SAP has increased its headcount in the MEA region fivefold over the past year, and McDermott said he expects BRIC and MEA regions to continue to show growth rates higher than established markets.

"I think the BRIC will grow very fast, Middle East and Africa will grow very fast. If you look at IDC's estimates for last year, IDC said MEA would grow at double digits, we grew eight and a half times their estimate, so we think that will continue, and we think that the BRIC and MEA will become a larger percentage of our overall sales in 2010 and beyond," he said.

McDermott also said that the Middle East market is in a strong position having continued to invest despite the economic circumstances: "If you look at what the Middle East did, they invested into the downturn, and you'll find every single time that companies have invested into the downturns, when the economy improves, those are the ones that become the market winners, the real leaders. I expect tremendous dividends to be paid back to the Middle East in the form of highly successful global businesses, as a result of this smart decision."

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