SAP plans job cuts, despite solid earnings

Even coming off a healthy quarter, business software titan SAP says it needs to cut costs for the coming year--and as elsewhere in the tech sector, that means job cuts.

SAP said Wednesday that for the fourth quarter, it had net income of 850 million euros ($1.1 billion) on revenue of 3.5 billion euros. Those figures represent a gain of 13 percent in net income and 8 percent in revenue year over year.

Revenue in software and software-related services at the Walldorf, Germany-based company was 2.7 billion euros, up 8 percent year over year.

For the full year, SAP's net income was 1.89 billion euros, down 2 percent from 2007, while revenue was 11.57 billion euros, up 13 percent.

But a troubling and unpredictable economic climate means that SAP, like many other companies inside and outside of high tech, will continue tightening its belt. SAP said Wednesday that it plans to trim its worldwide workforce by about 3,000 positions by the end of 2009--from 51,500 down to 48,500 jobs.

SAP said that the job cuts, at least some of which it expects to come through attrition, will lead to annual savings of 300 million euros to 350 million euros starting in 2010.

Here's how SAP sees the business environment for the coming year:

The Company expects the 2009 operating environment to remain challenging. In addition, 2009 will no longer include the positive effects from the acquisition of Business Objects, and the 2009 first-half results will be a difficult comparison to the strong results reported in the first half of 2008, which was prior to the economic crisis that disrupted the global markets in the third quarter of 2008.

For those reasons, SAP did not provide a specific outlook for software and software-related service revenue for full-year 2009.

[YankeePoodle]

how about cutting CEO and top management's Billion dollar bonuses? I am tired of the unimaginative CEOs and Management's knee-jerk reaction of "head count reduction".

[loose_screw]

Agreed. I can be a CEO and start cutting jobs too, now give me my $20 million bonus!

[Penguinisto]

This is looking less like an economic crisis and looking more like a self-fulfilling prophesy.

/P

[xcal78]

This is just a preimptive strike against 2009 being worse then 2008. Making a small profit in 2008 means they need to reduce costs to make a profit in 2009.

[tech_crazy]

"For the full year, SAP's net income was 1.89 billion euros, down 2 percent from 2007"

Just 2% (30 million) down and they need to trim the workforce! That too to achieve savings of 350 million, when the reduction in profits is only 30 million. They already have a healthy profit margin of 24% for the quarter and 16% for the whole year. This is eggregious!

I am convinced that this is for the executives to look good and pocket millions in bonuses (derived from the cost cuts due to the layoffs).