SAP Seeks Big Sales Growth In Middle East

RIYADH, Feb 18 - Business software maker SAP wants to buy small-size companies after recently acquiring Business Objects for 4.8 billion euros ($7.05 billion), its CEO said in an interview.

The German firm could also curb spending at any dramatic indication of a global economic downturn, Henning Kagermann told Reuters at the weekend.

"The key objective is to integrate the big acquisition of Business Objects. It does not mean that we are not prepared to do more acquisitions. We normally look on a regular basis at smaller companies," he said during a visit to the Saudi capital.

"For larger ones it depends on opportunities ... So far, we are not looking for larger ones, we are focusing on integrating Business Objects," he added. He declined to be more specific.

The firm, whose fourth quarter net profit slid 6 percent, has indirectly lost 366 million euros in sales to the weakening U.S. economy and 129 million euros in operating income in 2007 due to the decline in the U.S. dollar.

Kagermann maintained the 2008 business objectives that SAP (NYSE: SAP) announced on Jan. 30. "There is no need (to review business targets) ... We stick to what we said".

"I'm personally not that pessimistic ... Yes, the economy will not be as strong as it was in 2007, but I'm not one of the people believing in recession these days," he said.
 
"We know there is nervousness in the market ... But we will be careful and see what the market is doing and address our investment," Kagermann added. 

SAP is currently in negotiations to sell its TomorrowNow U.S. unit, but no deal has been finalised.

TomorrowNow is at the centre of a legal battle with rival Oracle over illegal downloads.

"I have no idea when this case will be settled," Kagermann said, adding SAP stands by its offer of a settlement, which Oracle has rejected.

SAP plans to quadruple by end-2010 the volume of its sales in the Middle East, an area where it holds 30 percent market share of business software sales. The Middle East business region comprises 16 countries stretching from Libya to Iran and covering the Arabian peninsula and Israel.

"In the fourth-quarter of 2007, our sales rose 60 percent compared to the year-earlier period ... against an 18 percent global growth in sales," Kagermann said.

Saudi state-oil giant Aramco is one of SAP's key customers in the region.

"We are looking for both large and medium size firms ... to become the undisputed leader in this region," Kagermann said.

Interest in the Middle East region was "not necessarily" motivated by a desire to offset a potential decline in the U.S., Japanese and German markets, he said.

"These are booming economies, it would be a big mistake not to do business here."