The worldwide economic downturn showed up in force in business software market leader SAP AG’s first quarter results today, with net income dropping 16% following a 33% plummet in sales of new software licenses.
“There is no doubt the business environment remains tough,” said Leo Apotheker, co-CEO of SAP, during a conference call with financial analysts.
Despite the big drop in software revenues, which fell to €418 million from €622 million a year ago on a GAAP basis, SAP managed to contain the impact by holding service-related revenue steady, growing the support business, and by cutting expenses. Total revenues for the quarter ended March 31 slid only 3% to €2.397 billion as support revenue grew 18% to €1.252, from €1.058. Net income fell to €204 million, from €242 million.
SAP said in January that it would cut its workforce by 3,000 workers, to 48,500 by the end of this year. Some 2,200 jobs have been slashed so far. The Walldorf, Germany-based firm has also been tightening up on variable expenses such as third-party costs and capital expenditures.