Another day, another set of applications software financial results to send shudders down Wall Street. When those shudders come from the poor performance of a powerhouse like SAP, they simply reinforce all the market's worst fears about the sector.
Bad news was expected following last week’s revenue warning, but the scale of SAP’s decline still took the market by surprise, particularly weaknesses in the CRM and supply-chain management (SCM) spaces. Sales of mySAP SCM declined 31 per cent from the second quarter of 2001 to 104 million euros, while second-quarter sales of mySAP CRM fell 3 per cent to 101 million euros.
Overall second quarter licence sales fell 23 per cent on the year to 496 million euros. The decline in US license sales was the most dramatic, falling 32 per cent to 100 million euros. This comes after a 28 per cent year on year decline in the first quarter. European licence sales fell 13 per cent to 311 million euros. Only Germany, which accounts for a third of European sales, saw a rise in licence revenues of five per cent.
Unlike the likes of Siebel and i2 where massive layoffs are underway, SAP said it would not cut existing posts, but a hiring freeze is being imposed. "We won't make any redundancies, but vacancies won't be filled," said the company's joint chief executive, Hasso Plattner, adding that the company’s goal of attaining 21 per cent operating margins remains intact.
Meanwhile e.piphany has seen second quarter revenues slump from $32.3 million last quarter to $19.4 million this year. The net loss for the quarter was $26.3 million, or compared to a net loss of $294.0 million during the second quarter of 2001.
For the six months ended June 30, 2002, E.piphany reported total revenues of $41.5 million, compared to revenues of $71.6 million in the same period of 2001. The net loss was $43.3 million compared to a net loss of $589.4 million, or $(8.79) per share during the same period of 2001.
Kevin Yeaman, chief financial officer, said, "Our balance sheet remains solid with more than $300 million in cash, DSO of 50 days and an increase in deferred revenue of approximately 15 per cent."