Earnings reports: SAP, Siemens suffer first-quarter profit slump

Software giant SAP and automation and electrical products maker Siemens both reported unexpected dips in earnings for the first quarter of 2008. Economic conditions, including rising raw material costs and the weak dollar, were cited as contributing factors.
By Manufacturing Business Technology Staff April 30, 2008

Two major technology vendors reported unexpected dips in earnings for the first quarter of 2008. Germany-based SAP , the leading supplier of enterprise applications, blamed acquisition costs and the weak dollar for its 22-percent drop in earnings from the same quarter in 2007.
Meanwhile Siemens , also based in Germany, attributed its 20-percent earnings decline to delays in delivering orders and rising material costs for its power division.
According to a statement issued by Siemens, the company’s net income in the three months through March fell to $598 million from $1.87 billion a year earlier. Sales rose 0.5 percent to $28.22 billion during the three-month period. Siemens said $872 million of the order-review charges came from delays and rising raw material costs at the power division. The remaining costs were booked in the transportation unit and the technology division. Siemens’s products range from light bulbs to medical scanners and wind turbines.
SAP, a software giant, reported a surprise drop in first- quarter profit to $377 million, down from $484 million a year earlier on acquisition-related costs and a weaker dollar. Software license sales, a gauge of future fees from maintenance and consulting, rose 11 percent to $970.2 million in the three months to March 31, missing the $1.06 billion median estimate of analysts.
SAP had predicted in January that software and related service revenue would increase 12 percent to 14 percent in 2008, excluding its recently acquired Business Objects business and currency swings. The company also said it will take 12 months to 18 months longer than the original 2010 target until the subscription-based software called Business ByDesign will reach it stated goal of $1 billion in sales and 10,000 customers.
SAP was founded in 1972 by five former IBM employees. The company now has more than 46,100 customers in more than 120 countries.