(Corrects spelling of analyst's name in 11th paragraph)
* Trims outlook for software and software-related services
* Japan, Australia, New Zealand especially affected
* Reiterates 2013 operating profit outlook
* Q2 operating profit 1.22 bln euros vs poll avg 1.26 bln
* Shares down 2 pct, underperform German blue-chips
By Maria Sheahan
FRANKFURT, July 18 German business software
maker SAP AG trimmed its sales outlook for this year,
warning that a slowdown in China was prompting companies across
Asia to put investments on hold.
China's growth rate slowed to 7.5 percent in the second
quarter, the ninth quarter in the last 10 that expansion has
weakened, in a setback for companies betting on a continued boom
in the world's second-biggest economy.
"The slowdown in China is now also impacting the tech
industry," co-Chief Executive Jim Hagemann Snabe told
journalists on Thursday.
That was having a knock-on effect to other companies in the
region. Companies in Japan, Australia and New Zealand,
particularly, have become more hesitant about investing, Snabe
SAP's biggest competitor, U.S.-based Oracle, last
month blamed Asia and Latin America for its disappointing
software sales and subscriptions.
The company cut its outlook for revenue growth from software
and software-related services to at least 10 percent in 2013,
excluding exchange-rate fluctuations, compared with a previous
forecast for 11-13 percent growth.
In the second quarter, its software sales to customers in
Asia-Pacific Japan dropped 10 percent at constant currencies,
the second quarter in a row of double-digit declines, after
rapid growth last year.
Including exchange-rate effects, sales were down 17
Snabe said he expected business in Asia-Pacific to recover,
though it was hard to predict when. "We will continue to invest
in Asia-Pacific," he said.
Shares in SAP were down 2 percent at 56.53 euros by 0913
GMT, in a flat market.
"It's only in the short-term that they may face
difficulties, given the negative economic environment and the
bottleneck in investments in the SAP client base," said Frank
Niemann and Tobias Ortwein, analysts at Pierre Audoin
"In the long term, it's a good story with more innovation
likely to come."
SWITCH TO CLOUD
SAP, whose software helps companies manage supplies, human
resources and customers relations, is reducing its reliance on
traditional business software to become a major player in cloud
The company reiterated that it expects 2013 operating profit
to rise to 5.85-5.95 billion euros ($7.7-$7.8 billion) at
constant currencies, from 5.21 billion in 2012 as it contains
costs and banks on growing demand for cloud-based services.
SAP has launched a cloud-based version of its HANA tool,
which helps companies analyse large quantities of data quickly
and competes with Oracle's Exalytics product, as well as a new
version of its Business Suite software running on top of HANA,
which it started offering in mid-May.
It has spent billions of euros to buy Internet-based
computing companies Ariba and SuccessFactors and battle IBM
and Oracle as well as nimbler rivals like Salesforce.com
Inc and Workday Inc for market share.
"We have about 30 million cloud users now, which gives us by
far the largest subscriber base in the cloud," Snabe said,
referring to the global market.
In the short term, customers' switch to cloud computing will
hurt revenue growth because payments for cloud-based services
are made in instalments rather than up-front in full, but that
effect is expected to even out in the long run.
In the three months through June, SAP's software and
software-related service revenue grew 10 percent to 3.35 billion
euros, the slowest growth rate in five quarters and a little
below the 3.41 billion euros analysts had forecast.
Second-quarter operating profit was also up by 10 percent at
constant currencies, at 1.22 billion euros, broadly in line with
($1 = 0.7637 euros)
(Additional reporting by Natalia Drozdiak; Editing by Erica