European software giant SAP SE plans to lay off up to 3,000 workers as part of a restructuring program, the company announced Thursday.
disclosed alongside its fourth-quarter earnings that it intended to begin a “targeted restructuring program in selected areas of the company” that would affect about 2.5% of its employee base.
See more: SAP to cut nearly 3,000 Jobs, weighs Qualtrics stake sale
“While we know these changes are necessary, it is never easy to make decisions that affect our colleagues in this way,” Chief Executive Christian Klein said on the company’s earnings call, according to a transcript provided by Sentieo.
On the company’s investor site, executives said the restructuring is meant to “further focus on strategic growth areas by aligning our operating models and go-to-market approach with our accelerated cloud transformation.”
See also: IBM and SAP join Spotify, Google, Intel, Microsoft, Amazon, Salesforce and other major companies laying off thousands of people
SAP also plans to explore the sale of its Qualtrics majority stake, Klein shared.
“SAP believes that this potential transaction could unlock significant value for both companies,” he noted on the call. “For SAP, to focus more on its core business and profitability; and for Qualtrics, to extend its leadership in the XM category that it pioneered.”
Qualtrics CEO Zig Serafin told MarketWatch in a statement that the move would be a “win-win situation.”
Shares of Qualtrics were up nearly 30% in midday trading Thursday, while shares of SAP were off about 2%.
Read: Qualtrics stock soars 30% after SAP says it will explore sale of stake
The announcements come as SAP reported what numerous analysts saw as a “mixed” quarter.
Bernstein analyst Mark Moerdler noted that while SAP fell short of expectations with its total revenue for the most recent quarter, its S/4 HANA Cloud enterprise resource planning software business saw 101% growth from a year earlier as it posted its sixth quarter in a row of acceleration.
Despite the mixed results, SAP had “strength where it matters most,” Moerdler wrote in a note to clients. He rates the stock at outperform.
But Jefferies analyst Charles Brennan, who has an underperform rating on the shares, said the latest numbers had “many moving parts” but that, in the end, “more numbers missed expectations than beat.”
“The only number to beat expectations is Services, which is generally incidental to the investment case,” Brennan said in a report. “All other numbers were in line/ marginally missed.”
SAP expects to recognize €250 million to €300 million restructuring costs, largely in the first quarter of 2023, and ultimately see “a moderate cost benefit in 2023 and €300 million to €350 million in annual cost savings as of 2024.” The company shared that the savings would “help to fuel investments into strategic growth areas.”
In that respect, Brennan wrote that “there is no profit upside, just costs to bear through the cash flow.”
Bernstein’s Moerdler, however, seemed upbeat about the company’s overall future.
“FY22 was meant to be the trough year for SAP, and the future looks bright,” he wrote.
Jonathan Swartz contributed reporting.