![Pinterest](https://pinterest.com/pin/create/button/?url=https://bollspel.com/sap-surges-on-plan-to-cut-8000-jobs-and-boost-profit-outlook/&media=https://bollspel.com/wp-content/uploads/2024/01/18322-sap-surges-on-plan-to-cut-8000-jobs-and-boost-profit-outlook.jpg&description="Discover how SAP's decision to cut 8,000 jobs and improve profit outlook is causing a surge in the company's stock and its impact on the tech industry. Learn more in this article."){kind=link}
Shares of SAP skyrocketed by as much as 8% on Wednesday as the German software giant unveiled a plan to reduce jobs while also increasing its profit outlook.
SAP
SAP,
+7.16%
SAP,
+0.10%
announced that it will eliminate 8,000 jobs this year, with the majority coming from voluntary leave programs and internal re-skilling measures. However, the company is committed to maintaining a headcount similar to the 107,602 employees in 2023 due to reinvestments into strategic growth areas. SAP revealed that the restructuring program is expected to cost about €2 billion ($2.2 billion) while delivering only a “minor” cost benefit.
“With this program, we are planning to intensify the shift of investments to strategic growth areas, above all, business AI, and to drive new efficiencies powered by AI across the business,” said CEO Christian Klein in a call with analysts.
Klein mentioned that he discussed the topic of artificial intelligence with customers and other global leaders at the World Economic Forum in Davos and noted that artificial intelligence was the focal point of nearly all those conversations. “Generative AI is the greatest opportunity since the rise of the cloud, especially for SAP,” he said.
SAP reported that its fourth-quarter earnings from continuing operations surged 94% to €1.17 billion, while revenue increased by 5% to €8.47 billion. Analysts polled by Visible Alpha had anticipated earnings of €1.37 billion on revenue of €8.33 billion.
Its cloud backlog saw a 25% rise to €13.7 billion, a figure that analysts at UBS described as “remarkable.”
While the 2024 outlook was significant, the even more notable part was the 2025 view. The company is altering its adjusted operating profit view to include €2 billion of share-based compensation expenses, but it is also raising its profit target by €500 million due to expected incremental efficiency gains from the transformation program.
Oracle, the rival of SAP
ORCL,
+1.57%
also raised its free cash flow guidance by €500 million.
SAP stock has surged by 15% so far this year and is up 51% over the last 52 weeks. Interested in reading more? Click
here
Read More rnrn