SAP’s Pledge to Stop Acquisitions, Cut Costs Boosts Its Share Price

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An employee working at SAP North America in Newtown Square
Image via SAP.

SAP’s shares rose significantly after the company, with its North American headquarters in Newtown Square, promised it would cut costs and put a halt to big acquisitions, writes Joseph DiStefano for the Philadelphia Inquirer.

Last year, SAP borrowed $8 billion to buy Qualtrics, a privately-owned analytics firm. However, SAP CEO Bill McDermott said during his quarterly conference call with investors that he had no more major acquisitions in sight.

“If we do something, it’ll be very tuck-in in its orientation and nothing sizable or scalable,” he said.

Shares in SAP climbed $14.28 after the announcement, topping $128 for the first time.

“Revenue, margins, and earnings per share were above consensus expectations,” analyst Brian Schwartz said, fueling expectations of higher future profits.

This shift in company policy came after it was disclosed that an activist investor, Elliott Management, had bought one percent of SAP’s stock and began requesting higher shareholder payments.

The announcement has resulted in Elliott managers Jesse Cohn and Jason Genrich saying that the firm “fully supports” SAP’s change in course.

Read more about SAP in the Philadelphia Inquirer by clicking here.

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