SAP CEO McDermott Says ‘Fully Recovered’ From Accident
(Bloomberg) — SAP SE Chief Executive Officer Bill McDermott said he is "fully recovered" from an accident that led to him losing an eye last year and pointed to cloud software sales in the Americas region more than doubling last year as evidence the company is modernizing on his watch.
At the company’s annual meeting Thursday in Mannheim, Germany, he told shareholders the company, under profit and license sales pressure from an industry transition to online business software, increased cloud computing revenue in the Americas region by 120 percent last year. Sales of cloud software and traditional programs in Germany increased by a "double digit" percentage, McDermott said.
Shareholders approved all measures on the ballot, including electing supervisory board member Gesche Joost, a Berlin computer design professor, for a five-year term, and ratifying a dividend of 1.15 euros a share.
Shares of SAP were less than 1 percent higher at 68.55 euros at 4:44 p.m. in Frankfurt.
"You may notice that today I’m wearing tinted glasses due to an injury I suffered last year. I am happy to report that I am fully recovered," McDermott said. The executive lost an eye in a household fall last year and was barred from flying for several months.
McDermott, CEO since 2010 and sole occupier of the role since 2014, is overseeing a transition at the maker of business applications and database software. His goal is to move from the company from selling programs customers buy outright and maintain, to business software delivered online through subscription licenses, often tapped from mobile devices workers carry everywhere. The shift has squeezed profitability and is starting to cut into license sales, which SAP had until now been able to protect.
SAP in March extended McDermott’s contract until 2021 and did the same for Chief Financial Officer Luka Mucic, Head of Products and Innovation Bernd Leukert, and sales chief Rob Enslin, solidifying Chairman Hasso Plattner’s team into the next decade.
Last week Apple Inc. teamed up with SAP to deliver software for iPhones and iPads, thrusting SAP more squarely into the mobile software market and making it easier for developers who customize its programs to write native apps for Apple devices.
McDermott said the teamwork can "stimulate huge demand" for SAP’s S/4 Hana flagship software suite, which manages financial reporting and manufacturing for businesses.
The company’s Hana Enterprise Cloud software will break even this year and achieve a gross margin of 40 percent in the "mid term," he said. The company as whole had a gross margin of 68 percent last year, according to Bloomberg data.
SAP will hold its annual Sapphire customer conference starting May 17 in Orlando, Florida.