German tech firm SAP drops as much as 17% after cutting 2020 outlook due to slow recovery from coronavirus pandemic

  • SAP shares fell as much as 17% after the German software maker cut its 2020 business outlook, citing a slower recovery than anticipated for many of its key clients from the pandemic.
  • Germany's biggest software maker cut its business outlook for 2020 to to €27.2 to 27.8 billion ($32.1-32.8 billion) from a previous estimate in April of €27.8 to 28.5 billion ($32.8-33.7 billion).
  • SAP said it would now target an expansion in its cloud computing division to more than €22 billion ($25.98 billion) by 2025, from €1.984 billion ($2.34 billion) in the third quarter of this year. 
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Shares in German software maker SAP fell by more than 17% on Monday, after the company cut its 2020 outlook, citing a slower-than-expected recovery from the coronavirus pandemic for many of its key customers.

SAP, Germany's largest software firm, cut its full-year business outlook for 2020 to €27.2 to €27.8 billion ($32.1-32.8 billion) from a previous estimate in April of €27.8 to 28.5 billion ($32.8-33.7 billion).  

Shares in SAP fell by as much as 21% to €98.88 euros ($116.7), at one point, dragging Frankfurt's DAX down 2.1%, making it the worst-performing index in Europe on Monday morning. 

In its earnings report, released before the start of trade, SAP reported a 4% drop in total revenue in the third-quarter of the year to €6.535 billion ($7.71 billion), due to a decline in its software-licensing business, which had previously been the company's bread and butter. 

SAP said it would now target an expansion in its cloud computing division to more than €22 billion ($25.98 billion) by 2025, from €1.984 billion ($2.34 billion) in the third quarter of this year.  But this did little to encourage investors, who drove the shares towards their biggest one-day loss since at least 2008. 

"While SAP continues to see robust interest in its solutions to drive digital transformation as customers look to emerge from the crisis with more resilience and agility, lockdowns have been recently re-introduced in some regions and demand recovery has been more muted than expected," the company said.

SAP, together with Deutsche Telekom, most recently has developed the Corona-Warn-App, a mobile track-and-trace system to detect people infected with COVID-19 that is used by the German health authorities

A SAP company logo seen displayed on a smartphone.
A SAP company logo seen displayed on a smartphone.
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Read More: 'The road to financial implosion': A notorious market bear says the Fed has set the stage for a 67% stock plunge — and warns of zero-to-negative returns over the next 12 years

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German tech firm SAP drops as much as 17% after cutting 2020 outlook due to slow recovery from coronavirus pandemic German tech firm SAP drops as much as 17% after cutting 2020 outlook due to slow recovery from coronavirus pandemic Reviewed by mimisabreena on Monday, October 26, 2020 Rating: 5

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