SAP AG’s share price up, plans job cuts to focus on cloud-based software delivery model

The worlds largest business applications maker SAP AG currently considers its first widespread lay-offs in more than four years, as the companys new strategy is to focus on delivering its products mainly online. One of the companys spokesmen – Mr. Jim Dever – made an e-mailed statement, explaining that the company, which is based in Germany, is planning to cut some jobs in order to shift from offering its services in customers data centres to delivering the products online and seeking greater efficiency.

The companys spokesman Mr. Dever said in the e-mailed statement, which was cited by The Wall Street Journal: “I can confirm that decisions will be made that will impact employees in a targeted effort. We will support affected employees to find new opportunities both inside and outside SAP.” As reported by Bloomberg, Mr. Dever also said: “This is a broad, company-wide effort to make SAP more effective.”

SAP AGs spokesman refused to make any further comments on the planned lay-offs. He also did not disclose any details about the exact number of the jobs that are to be cut. According to Mr. Dever, about 67000 employees are currently working for the company worldwide.

The announcement of the job cuts comes at a time when a series of high-level executive departed the company. However, as part of the reorganization, there is a vote scheduled on 25th May, which is supposed to make Mr. Bill McDermott the only Chief Executive Officer of SAP AG, as he is now co-CEO of the company.

In April 2014 SAP posted its earnings for the first quarter of the current financial year, revealing a result that came below the analysts expectations.

The company is expected to concentrate mainly on a cloud-based software delivery model, which is considered to be beneficial to the companys consolidation. In addition, the job cuts are expected to help SAP AG reorganize its resources taking into account its overall strategy.

SAP AG was 0.04% to trade at 56.03 euros per share by 12:31 GMT, marking a one year change of -12.49%. According to the information published on the Financial Times, the 34 analysts offering 12-month price targets for SAP AG have a median target of 65.00, with a high estimate of 88.00 and a low estimate of 43.37. The median estimate represents a 16.05% increase from the last price of 56.01.