![The business environment doesn't get any easier in the short term, says SAP CFO](https://image.cnbcfm.com/api/v1/image/107184302-16747267571674726754-27910736609-1080pnbcnews.jpg?v=1674728823&w=750&h=422&vtcrop=y)
German enterprise software company SAP said Thursday it could cut as much as 3,000 jobs, or about 2.5% of its workforce, becoming the latest tech giant to announce significant layoffs.
“We proceed to focus our portfolio on the areas where we’re strongest to proceed our accelerated growth,” said Christian Klein, SAP’s CEO, during a call about the company’s Q4 2022 results.
related investment news
![Microsoft's latest results show the tech giant is still up for grabs despite short-term pressures, analysts say](https://image.cnbcfm.com/api/v1/image/107183316-16745955982023-01-24t210439z_1989498312_rc29ty9bgi4f_rtrmadp_0_microsoft-results.jpeg?v=1674648664)
“This has prompted us to announce today that we intend to perform a really targeted restructuring in chosen areas of the company, which will include as much as 3,000 positions and will involve a discount of roughly 2.5% in headcount.”
SAP shares were trading greater than 2% lower at 8:05 a.m. London time following the announcement.
Responding to a matter about the estimated cost savings from the layoffs, Luka Mucic, SAP’s chief financial officer, said the company expects “around €300 million to €350 million” [$327 million-$382 million] running cost savings.
“We’re driving [the company] to double-digit profit growth in 2023, as we’ve got at all times committed, but the restructuring program will only be a moderate help to this result,” Mucic told CNBC’s “Squawk Box Europe” in an interview after the announcement.
“What it’s really about is a really focused effort to further streamline our portfolio and focus investments on areas where we clearly can have the most positive impact,” he added.
This comes after the company reported positive fourth-quarter results during the tender.
“Our cloud momentum accelerated in Q4 with S/4HANA [SAP’s enterprise resource planning software]. Cloud revenue can be accelerating again and growing by 90%. We also returned to positive operating profit growth of 2%,” said Klein.
“We met our guidelines across the board throughout the 12 months, and our cloud revenue grew 24%, five percentage points greater than in 2021.” – he said.
He added that the company achieved this despite exiting Russia and ongoing global macroeconomic fluctuations.
Last week, Klein suggested the company would avoid having to put off employees since it has a “very strong position” in an interview with CNBC.
He added that he was generally optimistic about the outlook for the technology despite the challenges of higher rates of interest and provide chain disruptions.
“We in the tech sector, we at SAP, are very confident about the coming 12 months,” Klein said at the time.
SAP weighs sale of Qualtrics stake
During Thursday’s earnings call, Klein also said that SAP intends to explore the sale of its stake in Qualtrics because “we’re specializing in our core.” SAP currently holds 71% of Qualtrics undiluted.
In November 2018, SAP acquired American business software provider Qualtrics for $8 billion. Qualtrics then went public two years later.
“We had a really successful partnership on the market and technology front with Qualtrics and we will absolutely proceed to achieve this,” said Mucic.
“This move is meant to configure SAP in order that it could possibly concentrate on its core ERP system [enterprise resource planning] categories and their accompanying categories, giving Qualtrics a fair higher ability to independently pursue leadership and make relevant investments,” he said.
He added that Qualtrics is “a pristine and first-class cloud asset” and that SAP “should give you the chance to realize a really positive shareholder valuation, but that is still to be seen.”
“This is able to significantly increase SAP’s profits, that are currently not reflected in the outlook,” he added without revealing further details.
Qualtrics on Wednesday announced its fourth-quarter results and revenue forecasts that exceeded analysts’ forecasts.
![SAP CEO says we are entering 'next phase of globalization'](https://image.cnbcfm.com/api/v1/image/107179187-16739437601673943757-27758621047-1080pnbcnews.jpg?v=1673945920&w=750&h=422&vtcrop=y)