The maker of expensive management software, SAP, is having some trouble making sales in Asia.
SAP’s Asian business stumbled at the start of 2013 partly because some of its top sales managers left.
Things should have gone better for SAP. Its customers are switching from localised hardware to cloud computing which should be just up SAP’s alley.
Gartner predicts that the cloud services market forecast should grow 18.5 percent this year to $131 billion worldwide but it requires software outfits to adapt fast and there are signs that SAP isn’t.
The company saw its first-quarter earnings and revenue below analyst forecasts. SAP says this is because of some leadership changes in the region.
SAP’s co-Chief Executive Jim Hagemann Snabe said that the Asia Pacific region would be back on track in the second quarter as the sales pipeline looked good and important sales positions were now taken care of.
However, disappointment in SAP’s quarterly results in the Asia Pacific Japan region is being seen as one of the reasons why the company’s share price slumped.
SAP shares were down 2.8 percent at 57.95 euros by 0932 GMT, while a broader index of European technology companies was down 0.7 percent.
Software and cloud subscription revenue in the East declined seven percent, lagging the Americas, where revenue jumped 49 percent, and Europe, the Middle East and Africa, where it grew 13 percent.
SAP faces competition in internet-based software from IBM and Oracle and nimbler rivals like Salesforce.com and Workday. It is also having to deal with an industry wide slump
Its main competitor, Oracle, reported a two percent drop in software sales in its fiscal third-quarter, which ended in February.
SAP claimed at the time that it had taken market share from Oracle and others as customers turn to cloud services.
Even with the Asian market down, SAP said it still expected operating profit this year to be $7.65-7.78 billion up 12-14 percent from 5.21 billion in 2012 which is better than a poke in the eye with a short stick.