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Follow UsSiobhan Kennedy and James Mackenzie
NEW YORK/FRANKFURT: Europe's biggest software group SAP AG on Thursday named
Leo Apotheker, the high profile head of its European business, as head of global
field operations as part of a shake up of sales and customer support.
SAP, confirming a Reuters report, also said that Apotheker would take over as
acting head of North America, replacing Wolfgang Kemna who becomes head of
Global Initiatives -- a new division set up to focus on faster-growing customer
and supply-chain manufacturing software products.
SAP said the changes, which would lead to the break-up of the current
Americas division into a North American and a Latin American unit headed by
existing Latin America chief, Raul Vejar, were aimed at ensuring adoption of the
best sales and customer support practices across the group.
Kemna, who took over as SAP Americas chief in April 2000, has had back
problems, which have made it difficult to complete the gruelling travel schedule
the job entails, but an SAP spokeswoman said the changes had nothing to do with
his health.
However, analysts said the moves appeared to suggest that the group had been
forced to strengthen its business in the world's biggest software market where
SAP, like all its major rivals, has been struggling with a sharp slowdown in
demand.
"I'd take it as a sign that things are still not really going that well
in America," HVB analyst Friederike Herkommer said. "I don't think you
can say Kemna has done a bad job at all, but it's evidently not enough. "I
think Apotheker is a kind of troubleshooter," he added.
The latest reshuffle comes about a month after SAP, which competes with US
giants Oracle Corp., PeopleSoft Inc. and Siebel Systems Inc., posted a sharp
drop in first-quarter software sales, saying its US customers were continuing to
hold off on new investments.
"We view this as a confirmation that business in North America has not
picked up yet and that further bad news is to be expected, said WestLB analyst
Norbert Loeken, adding that North America contributes about 35.6 per cent of
SAP's total sales and 25.3 per cent of total license revenues.
Apotheker and Kemna, members of SAP's extended management board, are two of
the group's highest profile executives, both popular with investors and
analysts. An SAP spokesman said the changes represented a promotion for both
men. "In this newly created position, Apotheker and his management team
will realign SAP's worldwide sales force around the needs of global customers
for consistent processes and seamless operations across geographies," SAP
said.
Shares rise
SAP shares, which have lost more than a third of their value since March to
approach immediate post-September 11 levels, fell initially but rose later. By
1120 GMT they were 1.84 per cent higher at 115.29 euros, outperforming the
Eurostoxx tech index which was down 1.84 per cent.
"I think it's probably positive in the medium to long term, but in the
near term the feeling is that the US has been struggling to show growth,"
one London-based analyst said. "It's not that Kemna's failed, but he's in
less of a day-to-day role and I think his health must have something to do with
that," he said.
SAP currently forecasts 15 percent sales growth in 2002 with operating
margins of 21 per cent, but with little clear sign of improvement in the global
economy, investors have been sceptical about the German group's ability to meet
the target. "The market looks very tough at the moment, not just for SAP
but for all of them. It just hasn't got better," Herkommer said.
WestLB's Loeken reduced his long-term target for SAP shares from 150 euros to
125 euros, or about 33 times its earnings per share this year, including the
expectation that the fourth quarter will show signs of a recovery.
The latest change is the second time SAP has reorganized its US operations in
the last two years, as the German software company tries to expand its market
share in the region. As part of a plan to overhaul the region and drive sales,
Kemna took over as head of the Americas two years ago from then-CEO Kevin McKay,
who held the position for just a year.
Although Kemna was widely acknowledged for having improved SAP's US
operations, the company still relies on European software sales for the bulk of
its revenue. Under Apotheker, SAP grew its EMEA business by 11 per cent in the
first quarter of 2002 from a year ago. By contrast, Asia Pacific grew six
percent and the United States just five percent.
Other management changes include Les Hayman, president and chief executive of
the Asia Pacific region, who will now become chairman of Europe, the Middle East
and Africa. Hans-Peter Klaey will assume the role of president, Asia Pacific,
while Kiyotaka Fujii will remain as president of SAP Japan.
Carol Birch, who is currently head of the company's CRM division, will now
become vice president of field training. All four and Latin America head Raul
Vejar, will report to Apotheker, who reports to co Chief Executive Henning
Kagermann.