SAP will not Meet Expectation for Third Quarter Earning

The global financial crisis has also affected IT industry. SAP announced that the revenue for the third quarter will not meet the expectation. The poor projection is due to the drop of orders. Although, SAP is expected to earn revenue between $1.02 billion and $1.04 billion for the third quarter and the number is 4 to 5 percent higher than last year. But, it is still far lower than the company projection of 20%.

The current global crisis, which originates from the real-estate market collapse in the United States, has caused a severe tightening in the credit market. Business houses are bound to lower the spending because of the cash crunch. SAP is not the only company that discloses bad news for the company. Dell in mid September also reported the drop of sales.

“We executed well during most of the third quarter,” co-CEO Henning Kagermann added. “That predictability disappeared once the financial crisis accelerated dramatically. … It has had a strong impact on our ability to sign contracts. Many customers expressed the need to focus on shorter-term concerns and put planned IT investments on hold for now.”

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