SAP AG issued a warning yesterday that it is reducing its revenue and earnings expectations for its just-ended second quarter.
An inability to close key deals in Europe and Japan, along with year-over-year revenue declines in the Americas and the Asia-Pacific region, contributed to its revenue crunch, SAP said. The company now expects second-quarter revenue of about 1,778 million ($US1.76 million), a 4 per cent drop from the year-ago quarter, and operating income of approximately 326 million, down 23 per cent. SAP will release its full second-quarter results next Thursday.
SAP also revised its full-year 2002 expectations, saying it now anticipates revenue growth of 5 to 10 per cent.
While revenue in SAP's largest market, EMEA (Europe, the Middle East and Africa), grew 1 per cent during the quarter, revenue in the Americas declined 12 per cent and revenue in the Asia-Pacific area dropped 5 per cent, SAP said.
SAP also warned that it intends to write off 318 million related to its investment in Commerce One, an ailing software and services company of which SAP owns 20 per cent. One-time charges, including the Commerce One charge, will cause a reported net loss of about 235 million for the quarter, SAP said.
SAP has previously recorded some of Commerce One's net losses on its own income statements. Taking an impairment charge this quarter will reduce the risk of further losses from Commerce One on SAP's own balance sheet, the company said.
Trading of SAP (SAP) shares was briefly halted on the New York Stock Exchange and German stock exchange before the company released the lower forecast. After trading resumed just before noon EDT on the New York Stock Exchange, SAP's share price was $18.75, down 12.18 per cent from Wednesday's close.