SAP Increases Outlook on Cost Cuts and Growth in Cloud Computing
SAP SE raised its annual profit forecast on growth in the cloud business, while the activist Elliott Management revealed a stake and endorsed the German software company’s change of direction.
Walldorf-based SAP reported a 26 percent increase in new cloud bookings for the first quarter at constant currencies, an acceleration from the October-December period. Separately, Elliott disclosed a stake of 1.2 billion euros ($1.3 billion) and said the stock has been “consistently undervalued” relative to its revenue growth.
SAP shares rose as much as 7.1 percent as Chief Executive Officer Bill McDermott’s bets on the cloud business start to pay off. The company has spent more than $10 billion to buy U.S. cloud startups Qualtrics International Inc. and Callidus Software Inc. to better compete with Salesforce.com Inc. and Oracle Corp.
SAP said Wednesday that it’s planning “new initiatives to accelerate operational excellence and value creation” and will brief investors and analysts on those plans during a special capital markets day in November. The company will evaluate a share buyback program and focus on “tuck-in” acquisitions.