SAP and CA forecast IT spending recovery

22 January 2004 Enterprise software suppliers SAP and Computer Associates (CA) both posted increased revenues and issued optimistic forecasts for stronger growth in 2004.


Although neither set of results were enough to suggest a strong recovery quite yet, the CEOs of both companies spoke confidently of positive trends and increased investment in software from business.

Revenues at enterprise resource planning (ERP) software giant SAP, fell 5% in 2003, to €7.025 billion. Sales also fell in the fourth quarter, by 6% to €2.15 billion, compared to the same period a year earlier.

However, the company attributed the disappointing figures to changes in the value of the dollar. If the effect of the devaluation of the dollar is taken into account, SAP revenues actually grew marginally, say analysts.

SAP executives are confident that licence sales will pick up during 2004, forecasting growth of up to 10%.

“We believe 2004 will demonstrate the continuation of a trend that we saw evolve in the second half of 2003: clear signs that companies started picking up the pace of their software investments,” said SAP CEO Henning Kagermann.

He added that SAP had strong deals in the pipeline and that wider economic growth would help boost 2004 sales.

CA, in contrast, is thought to have benefited substantially from the weakening dollar.

Sales of CA’s corporate computer and network management software in its third fiscal quarter to the end of December increased by 13% to $844 million. The company suggested that this was due to stronger contract bookings, particularly outside the US.

Its debt levels have also been cut substantially, but still stand at just under $1 billion.

“We are optimistic about the trends we are seeing in the marketplace,” said CA CEO Sanjay Kumar. He added that he was encouraged by signs that technology spending was “gradually increasing”.

Net income for the quarter stood at $22 million, up from a net loss of $44 million in the same period in 2002, but CA still made a loss of $56 million for the nine months to the end of December 2003.

Siebel Systems and Symantec also posted good results, following up last week’s improvements from Sun Microsystems and IBM.

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Ben Rossi

Ben was Vitesse Media's editorial director, leading content creation and editorial strategy across all Vitesse products, including its market-leading B2B and consumer magazines, websites, research and...

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