writes:
According to SAP SE, the short-term cost of moving toward cloud computing will pay off with long-term gains. In the interim, investors are wary.
Shares in the world?s biggest maker of business software plunged last month and are heading for the worst year since 2008, as the move to serve customers via Internet applications instead of computer-stored programs weighs on profit. Bearish options on the German firm rose to the highest level in more than two years relative to bullish ones, data compiled by Bloomberg show.
Investors have punished SAP?s stock as it struggles to catch up with rivals including Salesforce.com Inc. (CRM) and Workday Inc. (WDAY) on sales of cloud-computing tools. The shift means customers pay over time rather than at the start of a contract, hurting near-term profit. While the strategy may eventually benefit, forecasts for earnings before interest and taxes was disappointing, said Royal London Asset Management?s Neil Wilkinson.
?The market is struggling to model the financial impact of the transition to cloud revenues,? said Wilkinson, a London-based fund manager who owns SAP shares. ?My main concern is the lack of visibility in forecasting EBIT in the short term given the shift.?
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