SAP shares slip on CEO's ouster, questions (AP)

FRANKFURT – German software maker SAP AG's stock slid 2.5 percent Monday, the day after CEO Leo Apotheker unexpectedly resigned and was replaced with a pair of co-chief executives.

The company's stock closed at euro32.56 ($44.53) even as the wider German DAX blue-chip index rose nearly 1 percent.

Analysts said the move was part of the company's effort to regroup and improve earnings performance in the wake of the financial crisis, which caused many companies to scale back.

"The issue with maintenance, poor quarterly performance, his aggressive but brash style, and a need for a technologist at the helm all contributed to the decision," said R. "Ray" Wang, an analyst with Altimeter Group LLC in California. "SAP needs a good technologist in place as they have to right-side the roadmap."

SAP, based in Walldorf, said Sunday night that Apotheker, who became joint CEO with Henning Kagermann in 2008 and then had the job to himself after Kagermann retired in 2009, left after the supervisory board "reached a mutual agreement" not to extend his contract.

The board, the German equivalent to a U.S. board of directors, appointed Bill McDermott, head of field organization; and Jim Hagemann Snabe, head of product development, to replace him.

McDermott joined SAP in 2002 and oversees global field operations for the company. He joined its executive board in 2008. Hagemann Snabe joined SAP in 1990.

SAP declined to make either executive available for an interview on Monday.

In a research note, DZ bank said the change brings a pair of experienced managers to lead the company.

"We do not expect any fundamental change in corporate strategy, however, but a faster implementation of it," the note read.

Last month, SAP, whose programs help companies do back-office work such as payroll, inventory management and accounting, said its fourth-quarter net income fell 12 percent to euro727 million ($995.3 million) because of difficult market conditions, but said it expected an improvement this year.

Despite the drop, SAP's stock in the U.S. has been on the rise, gaining 16 percent over the past year. Its chief rivals, Oracle Corp. and Microsoft Corp., however, were up 31 percent and 41 percent, respectively.

Analysts said that by shifting the company back to co-CEOs, it was moving to change SAP's course to be more nimble in developing new products and technologies for customers, both existing and potential. One of SAP's highest profile customers is Apple Inc. which uses SAP software for its iTunes downloads.

Company co-founder, Hasso Plattner, who chairs the supervisory board, will play a strong role in advising the co-CEOs on technology and product development.

Plattner told reporters in a conference call that SAP would become a multiple product company.

"We are at the advent of the largest, most significant changes in the industry," he said. "The next years will be dominated by massive parallel computers. We will see a massive shift. It will be a catastrophic move to be on maintenance without innovation. We have to maintain and innovate."

Plattner's role bodes well for the company, Wang said, adding that Apotheker lacked "the charisma and empathy to pull off" a transformation at SAP.

"I think Hasso's got a good pulse on what's important — customers and employees," Wang said. "Those are their two biggest assets and they need to keep them happy."

Paul Hamerman, vice president for enterprise applications with Forrester Research Inc., saw the move as a chance for SAP to "renew its long-term technology vision and restore the faith of its customers."

He added that the abrupt manner sent a "clear signal" that SAP itself had not been moving in the right direction.

"I would not go so far as to say that the company was in serious trouble — it is still profitable and the customers will not disappear overnight because the cost of switching ERP systems is very high," he told The Associated Press in an e-mail.

"On the other hand, many customers were upset about support price increases and overly aggressive sales on add-on products."

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