The largest technology company in Germany – SAP AG – made a statement, revealing its earnings and sales for the first three months of the current financial year that trailed analysts estimates. The companys results were affected by the strong euro. SAP AG, which is known for making managing inventories, financial performance, human resources and deliveries programs, has currently been focused on offering its software products on the Web.
According to the companys statement, its first-quarter sales increased by 2.7% and reached 3.7 billion euros (5.1 billion dollars), trailing analysts estimates of 3.8-billion-euro sales. SAP AGs operating profit, (excluding some items) rose by 2% and reached 919 million euros, missing analysts projections of an increase to 975 million euros. The companys net profit rose by 3% to 534 million euros.
One of the analysts, who work for Citigroup Inc. – Mr. Walter Pritchard recommended purchasing the shares of SAP. He also commented for Bloomberg: “Even though these businesses have generally performed well, they represent just 14 percent of revenue.”, referring to the companys recent acquisitions of cloud developers.
SAP AG confirmed its initial forecast for the current financial year, but also explained that it expects exchange rates to affect the second-quarter results. As reported by the Wall Street Journal, the Co-Chief Executive Officer of the company – Mr. Bill McDermott said in the statement: “We are reiterating our 2014 outlook with confidence.”
SAP AG reported that its cloud subscription and support revenue rose by 32% and reached 221 million euros. This segment of the business has proved itself as quite predictable, which makes it so attractive. Currently, the company has become more focused on offering its software products and applications on the Internet and the strategy seems to be working, judging by the first-quarter results posted by the company.
SAP AG was 3.22% down to trade at 56.55 euros per share by 10:54 GMT, marking a one-year change of -3.96%. The 34 analysts offering 12 month price targets for SAP AG have a median target of 65.00, with a high estimate of 89.00 and a low estimate of 45.00. The median estimate represents a 11.24% increase from the last price of 58.43.
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