Kevin MacKay, head of SAP Americas resigned yesterday, citing "personal reasons", immediately after the German software vendor announced a dramatic fall in quarterly profit.
SAP's profit for the first quarter to 31 March collapsed 43 per cent to 56m euros on revenue up 10 per cent compared with last year.
The company blamed three factors for its poor showing. Firstly, the cost of the Star share option programme, which cost 239m euros in the quarter, but this was offset by investment sales of 238m euros and had been previously anticipated.
Second, chief executive Henning Kagermann said competition for web-based products, particularly in the US, had been fierce.
Earnings from mySAP.com, SAP's flagship internet portal, edged up to 22 per cent of the total but fell from 129m euros to 80m euros. This is in sharp contrast to success seen by Oracle, which last month posted improved profits.
Analysts are generally agreed that SAP will bounce back later in the year, but this is far from certain. MySAP.com has met resistance in some quarters because SAP's licensing model requires that existing customers re-license the software, adding to cost with little apparent benefit other than cleaning up an interface many regarded as in bad need of a facelift.
In a separate announcement, SAP said that Kevin McKay, head of SAP's US operations, has resigned for personal reasons. SAP tried to keep McKay in place, offering him the group chief finance officer job, but he declined. The company said: "We are sorry to see him leave, he has contributed much to SAP. We wish him well."
McKay's departure is a significant loss as he has guided the American operations during a particularly difficult period where sales are falling and top people are leaving. Part of the reason for his departure may lie in the recent formation of a separate development unit at Palo Alto dedicated to the B2B market. With falling sales in the core business, McKay's power base has effectively been eroded.
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