SAP says move to cloud delays profitability goal

Reuters News
Posted: Jan 21, 2014 1:26 AM

WALLDORF, Germany (Reuters) - German business software maker SAP said on Tuesday that additional investments in its cloud business would delay reaching its profit target.

SAP said its operating margin goal of 35 percent would now be reached in 2017 instead of 2015.

SAP and rivals such as IBM and Oracle are dashing to meet surging demand for cloud computing, which allows clients to reduce costs by ditching bulky local servers for network-based software and storage in remote data centers.

The fast-growing cloud business would create a more predictable stream of revenue, SAP said.

Total revenues would reach at least 22 billion euros ($29.8 billion) by 2017, of which between 3-3.5 billion is expected to come from SAP's cloud business.

SAP had already published preliminary results on January 10.

(Reporting by Harro ten Wolde)