Date Posted: 9/18/2009
Possible loss of Siemens contract hits SAP
Computer Software Siemens AG SAP AG Oracle Corporation
John Letzing, MarketWatch
Sept. 17, 2009, 8:03 p.m. EDT
Questions have been raised in recent days about German corporate software giant SAP AG's potential loss of maintenance contracts with Siemens AG -- a key customer that could potentially influence decision-making among its peers. According to media reports, Siemens, a Munich-based goliath that pulled in over 18 billion euros ($26.5 billion) in revenue in its fiscal third quarter, has submitted a termination notice to SAP related to maintenance contracts for its software applications. Maintenance contracts are a dependable source of recurring revenue for SAP /quotes/comstock/13*!sap/quotes/nls/sap (SAP 50.01, -0.74, -1.46%) , as they are for SAP rivals such as Oracle Corp. They also offer profit margins that reach 90%. Speculation about the possible loss of such a significant contract has therefore rattled some on Wall Street.
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