Thread regarding SAP layoffs

@cw compare with our competitors, we see too many PMOs and Chief of Staff...

The decline will stop once the board gets good approval rates in the survey.

Stock has today fallen below $260. In last two weeks it has dropped 20 points - straight down.

No sign of any rebound whatsoever.

We go below $250 firewall, will be a bailout from large institutional investors who had enough and will find other places to invest and cut their losses with SAP.

@q7 the suite aught to have been an integration and api story, of having a useful public api for everything and a high quality integration platform that had default integrations to each SAP product. Then you can position as both best of class and best of suite. Instead we decided it was fine to be mediocre of class and alright of suite for expensive to run on prem software hosted on hyperscalers rather than cloud native cost efficient portfolio of business services that where integrated together into best of class products via a high end business app platform. Unfortunately the leadership and engineering of the core erp won and we ended up with the luke warm rubbish we have now.

Do you think the board can turn this around?

I am not sure.

There are significant risks to SAP with its strategy going forward. The Maintenance business which has been a primary source of revenue for SAP will be eliminated in next couple of years. This will take an enormous amount of profit off the table, which Cloud business will never replace.

Our profit margin has fallen and is now currently at 12.3%. The transition to cloud was very cost intensive for us, which kept margins during the last 3 years below 10%. Before that, our profit margins ranged between 15% and 20%.

SAP stock price is 260.01 and our 200-day simple moving average is 280.48, which the market sees as a Sell signal, this also sets the stock as "overvalued".

Can SAP turn this around and move the stock back to above $310 per share? Sure. But do we have the Leadership to make this happen? Not sure.

I don't think we can determine a long-term trend out of a few months' worth of data, given the chaotic economical and political landscape worldwide right now.

We still have a solid business and a well-filled sales pipeline.

Let us hope and work for success.

@py If you were on that Q3 check in call with CK there, they were saying how competitors in countries are beating us down in costs. No, the biggest competitors are other US companies like Oracle who are vying for large US contracts and are positioning themselves as "America First" such that the current administration would purchase from under the Buy American umbrella. We are tying customers down in these large expensive contracts with little wiggle room to leave and customers will get sick and tired of hearing the same song and tune. Sadly, this makes the company complacent in driving any meaningful innovations to keep customers happy and giving them a compelling reason to stay with SAP. They wanted innovations yesterday, and we need to stop being a yesterday company. Mass layoffs isn't going to fix this. And people will be working their bones off to survive not innovate.

There is low adoption of AI solutions across big tech and we are seeing mass layoffs in favor of cheap Indian Engineering and Product Management teams. The old adage of "you pay for what you get" rings true. Pay cheap, get cheap. That's why these innovation releases don't ruffle the feathers.

Lastly, we are seeing this Business Suite trend of tying all of our solutions innovations to the S/4HANA solution. This isn't good, because if your solutions are interdependent on one another then there will be innovation dependencies. Meaning if SuccessFactors needs to role out a solution that requires the S/4 product teams to get their s*** together and they aren't ready on their side, things on SAP SF will be delayed. While it sounds amazing from a positioning standpoint, the technicals don't agree.

Sadly, the people who pay are colleagues in high cost locations with layoffs and overworked cheap Indians in Mumbai, who are getting sc--wed over and short changed.

I have checked all the numbers and this decline will last for between 87 and 112 years.

SAP's share price will continue to fall because two things drive value - innovation in your product offering or opening up a new potential market for your products. SAP can do neither. SAP management does not cultivate a climate of innovation but rather encourages people to put their own self-preservation above the company's interests. No one will go out on a limb and suggest we pivot away from a product that is not working, like Joule, because no one will get a raise or bonus for pointing that out. SAP is much too expensive so the whole GROW effort targeting mid size companies will never succeed. There are no new markets for SAP products, and SAP has basically re-sold the large clients their own software estate via RISE. Four external factors will negatively impact SAP: 1. The Data Act which means EU customers can demand transition assistance to migrate your data to a new provider. Why would you use SAP to manage your cloud infrastructure when you already have a large presence on AWS? 2. SAP is not agile, and cannot adapt to the changing landscape of AI or product innovation so will be offering the same old tired products hoping that large customers have too much invested in highly customised SAP sw to move. AI will change all that and be able to replicate your customisation on a new platform. 3. Oracle is aggressively going after large government entities and will tie them up for years in long term implementations that they will be unwilling to forego if it goes wrong and 4. The SAP NetWeaver vulnerability that brought down JLR product lines will only worsen, and customers will see the folly of relying on outdated SAP programs that require the entire production line to be paused in order to apply a security patch. If the investment community were smart, they would take their gains now - the stock rose sharply the last two years so there are still significant gains to be taken out before the share price goes lower which will inevitably happen after Q4 results are released. The latest cut at Palo Alto shows SAP employees their future - all development will go to India. SAP will announce monumental cuts, similar to MSFT, Amazon and others, in the nature of 20,000 - 25,000 employees in non low cost countries. How else will they fill those 15,000 employee capacity campuses in India? SAP has no choice now - if you can't grow you have to cut costs. Why else do you think they brought on DA - that is his chief skill - offshoring workers. Enjoy it while it lasts - the middle managers with the least talent are always the last to go!

@OP

The question might as well be when looking at SAP's largest shareholders ( ie. BlackRock, The Vanguard Group....) do they now thrown the towel and sell off stock and take significant losses on the bail out or do they demand changes?

For those who were here 6 years ago we know how the Elliott group handled matters and it wasn't pretty.

My 2 cents is that for the largest shareholders to bail out, it would then appear that they have lost all optimism in SAP's future and are willing to take losses that will also impact their own investment business with their own customers who then question the investment houses strategy. Rather I would see at this point, they will put more pressure on the Board to get the stock in positive territory and to do it quickly.

The question then would be, how does the Board respond to this pressure and where do they find the actions to satisfy the shareholders and move the stock price upwards... and of course to save themselves from any personal consequences.... and then what does that mean for all of us?

When the AI bubble pops….It will be lights out for the executive team. The only question for me is what percentage of a functioning company remains.

@ed how many executive bonuses are based on EPS, a metric that can be manipulated via the numerator, the denominator, or both?

If buying our way into profitability the only way, we need to seriously look at removing the entire executive board and finding real leaders. These kids who learned to wipe their as--s 10 minutes ago aren’t going to cut it.

@OP

Stock price decline ??      Let us not forget that  our Board instituted a "share buy back" program.  Starting in 2017  we have bought back shares in many years since the start.    At this point about 9  Billion Euros in share value have been repurchased by SAP..

So why do companies buy back their own shares?   It's is done primarily to increase shareholder value and subsequently pump up share price.    By reducing the number of outstanding shares, SAP can increase its EPS, even if its' total profit remains the same ( or even if it decreases) - higher EPS makes a stock more attractive to investors.

It's a clever game.    Now stop and think just how far our stock would have fallen without this buy back program - it would have been a disaster.    But will it fool the investors?   Don't think so, but we shall see. 

It will get far far worse before it gets better. There’s so little faith in SAP’s future that firms are reducing their investment positions.

https://www.marketbeat.com/instant-alerts/filing-atria-investments-inc-reduces-position-in-sap-se-sap-2025-10-31/

Trust CK and DA! This is an order!

SAP's portfolio lacks anything beyond Cloud ERP that could instill confidence in shareholders. Joule's adoption rates are so dismal that it should be deemed a failure already, yet the company continues to push it onto customers through questionable bundling strategies like Microsoft Copilot.

Meanwhile, Signavio and other recent acquisitions are facing legal issues due to allegations of copying Celonis by poaching their employees, not to mention the negative attention from promoting s-xual predators instead of terminating them.

Compared to rivals like Microsoft and Oracle, SAP's growth is tepid; those companies have streamlined productivity by fostering larger teams and reducing the layers between customers and developers, while SAP has gone in the opposite direction with HPOM, resulting in numerous small teams of fewer than ten members.

It seems the board lacks the courage to innovate and remains tethered to Joule, with no clear long-term strategy in sight. Consequently, layoffs appear to be the only option left, as the board aims to boost their bonuses by orchestrating job cuts that might temporarily inflate the stock price, leading to what could be unprecedented layoffs in Q1, though any resulting increase in stock value is likely to be minimal.

I am optimistic the board will find a way to fix the stock price.

@ah

The increase of SAP's stock  in Q1 2025  was due to  very strong financial results that beat market expectations.    Most of this stock price increase was primarily due to  accelerated cloud revenue growth and a significant increase in operating profit  Factors such as 29% increase in current cloud backlog and a 27% YOY increase in cloud revenue and a 58% increase in operating profit were responsible for the stock price move   Due to all of these in Q1, SAP was viewed as executing a very successful cloud transformation and implemented the right measures to control internal costs.

All of these results exceeded analyst expectations and all the while SAP maintained its full year outlook.  But now things have changed drastically and the stock has plunged  from a high of $309 now to $259.   So I would agree that if CK does not restore some of the stock price back to its high mark the investors will lose patience and he will not be the only one concerned about his position - all of us will be as well, but in any case I believe we the employees will be well ahead of him.in the layoff line.

... we best find out where Asam buy his dental products so we can have some advance warnings....-:)

The stagnation of SAP stock is not only due to internal issues SAP is struggling with but also to the overall global economic situation.   

The  World Bank projects global growth to slow to about 3% in 2026 and has forecasted that the global economy will have its weakest performance in 2026  since 2008 ( and we all remember what happened to the markets in 2008).  Nearly two thirds of countries in the world had their growth forecasts cut from the bank's last set of predictions at the beginning of 2025.  Trade tensions will further lead to  global trade seizing up  as the effects of US tariffs  get more embedded in pricing structure.  

All of this has led to the World Bank predicting that  the Global economy will see the slowest decade for global growth since the '60's.   I would see for both internal and external factors that SAP will be forced to have RIF, which may be why Asam talked about tooth brushing akin to regular layoffs - they will be ongoing.

Was the run-up to the February/March high really justified by SAP’s current performance and potential future performance or did we just have a temporary overvaluation based on industry-wide AI hype?

(That is a rhetorical question obviously.)

Q3/2025 results were released last week and the investment community reaction to the results was at best indifferent - nothing that CK or DA put forward has had any impact on moving the stock upwards.

Yes, our revenue results fell short of analyst forecast, accordingly SAP revised its full-year 2025 cloud revenue guidance to the low end of its €21.6–€21.9 billion range. This came after its Q3 cloud revenue growth of 22% was its slowest since the fourth quarter of 2023 and missed analyst projections.

Accordingly, SAP stock is and has been, at weakening slump - nothing our Board has stated has motivated the investment community to buy into SAP .

Should the stock standstill remain into December, then I would agree Layoffs will have to occur to satisfy the investors that the Board is taking strong action to stabilize the stock price.