SAP: Q1 13 sales and operating margin below expectations but FY13 guidance reiterated

BUY, Fair Value EUR70 (+17%)

News published on April Friday 19, 2013
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This morning SAP reported disappointing Q1 13 results, with Product (SSRS) sales 3% below our forecast and the consensus’ average, and an op. margin 1ppt behind projections, while non-IFRS net profit and EPS were in line thanks to a low tax rate. FY13 guidance is reiterated, while management pointed out sales execution issues in Asia Pacific to explain the revenue shortfall amidst leadership changes and a slow start of the year. These issues are expected to be fixed in Q2 13, and we hope management will be convincing enough on that topic as it was one year ago when execution problems arose in Europe and Americas. We expect a negative share price reaction near-term.

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