SAP culls jobs in time for Christmas

SAP, the largest maker of business management software, has confirmed that it will axe roughly 300 jobs, or seven per cent of its US workforce, before the end of the year.

The cuts, part of the company's reorganisation plans, represent less than one per cent of SAP's total workforce. SAP America employs around 4,200 of the company's 26,500 worldwide employees.

A spokesman explained that the layoffs would not affect customers, as the strategy applies to SAP America pursuing new business. He added that some areas would be consolidated while others would be dropped.

In a research note, Prudential Securities analysts said: "This cut shows management's commitment to preserving profitability in this challenging selling environment.

"We still believe it is unlikely that SAP will achieve fourth-quarter guidance and consensus estimates. Our estimates remain meaningfully below these. We remain bullish about the company in the long term, but see short-term risk related to a probable miss, in our view, in the fourth quarter."

The cuts will take place as SAP realigns its US business from 21 industry groups into 12 vertical industry clusters in order to focus on the three core areas of ebusiness software: customer relationship management, supply chain management and enterprise resource planning.

The 12 areas include the hi-tech, chemical and pharmaceutical, retail, aerospace and defence, oil and gas, automotive and insurance industries.

Last month SAP cut its sales and earnings targets for the full year. The company, which said it would reduce its workforce in the US in October, has already closed a service centre in Texas which eliminated about 80 jobs.