posted at 00:50
Author: Chris O'Brien
Mon, 20 Oct 2014 07:24:40 +0000
Transition to cloud forces SAP to slash earnings projections
Not happy news for investors, right? But it was cutting the forecast because more customers are switching to its cloud services. Taken together, the latest update highlights the tricky balancing act that legacy companies like SAP face as big customers move away from their traditional packaged software business toward cloud-based services. "We are accelerating our shift to the cloud with more than 40% revenue growth in the cloud," said Bill McDermott of SAP in a statement. SAP said today it will report an operating profit of $7.1 to $7.4 billion. In highlighting the growth in cloud services, the company said that meant its revenue was undergoing a big shift. Cloud services operate on a subscription model, which provide less money up front, but more regular revenue over time. SAP execs, in the press release, said they were confident that the cloud deals being made today would bolster earnings in future quarters. SAP has about 12,500 employees in North America, with more than 2,000 employees in Newtow... read more ».

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