PhillyDeals: Optimistic words from SAP's new (co-)CEO

SAP AG's sales boss, Bill McDermott, was in Hawaii on Sunday, rewarding top sellers, when the business software giant named him co-chief executive officer, following the surprise resignation of Leo Apotheker, who'd been sole CEO at the Germany-based business software giant.

An outsider might wonder if congratulations, or condolences, were more in order for McDermott. SAP shares fell 6 percent on the news, to a six-month low, in New York Stock Exchange trading yesterday.

The move to share the CEO post, between McDermott and product development chief Jim Hagemann Snabe, followed SAP's announcement late last month that 2009 sales fell nearly $1 billion, to $10.7 billion, and profits slipped for the second straight year, even after the company cut 4,000 jobs.

SAP now employs 48,000 worldwide, including 2,000 at its U.S. base in Newtown Square, where McDermott has worked since joining the company in 2002, 20 years after he started his tech career cold-calling corporate copier clients for Xerox Corp. in New York.

The market for SAP's best-known product, enterprise resource planning software, "is saturated, and the company has not been able to reinvent itself in such a way that will enable it to continue growing," Cowen & Co. analyst Peter Goldmacher told my colleague, Linda Loyd. "Ultimately, they will be acquired."

That's not the company line. Chairman Hasso Plattner, in a conference call announcing the new CEOs, acknowledged SAP had "lost here and there the trust" of workers and customers in the past year as it cut staff and tried to raise prices.

But he defended the company's technology and its prospects: "SAP will become a multiple-product company." And Plattner promised to repair SAP's damaged culture: "We are a public company, and profit is everything, but in order to be profitable it needs to be a happy company . . . again."

In the January earnings report, McDermott promised new sales in the company "pipeline," and he compared SAP favorably to rival Oracle Corp., whose business applications, he said, "haven't exactly set the world on fire."

By phone from Hawaii yesterday, McDermott told me SAP trusts in its customer base, "95,000 customers in 25 distinct industries."

Even as Comcast, Verizon and other consumer communications companies are scrambling to keep customers by offering their products through a range of home, business and handheld devices, SAP and rival business software makers are ramping up applications that link computer networks, remote ("cloud") computer networks, and handheld devices. McDermott pitches SAP as "the standard business software platform that orchestrates the customer between those domains," as it adds smaller companies to its target list.

How do you share authority with a co-CEO? "One, you have to have complementary skills, which Jim and I do. Two, you have to trust each other unconditionally . . . And you have to have a tremendous passion to win." SAP had dual CEOs in its fast-growing past; so have many big German companies, and Microsoft.

McDermott says he's not afraid to be judged by his company's future numbers. "Customers will vote with their wallets. We're a public company. We stand by that. You have to be measured by your record . . . This is a time for leadership, and I don't think that's unique to SAP."

Graham Packaging Corp. of York sold a controlling stake to investor Blackstone Group in the late 1990s, enabling Donald C. Graham and members of his family to diversify their suburban Philadelphia-based investment interests.

This month, Blackstone, Graham and other investors hope to raise as much as $429 million for themselves and to repay company debt in the company's initial public stock offering, at around $15 a share.

Graham Packaging told the Securities and Exchange Commission it earned $61 million in the first nine months of last year, after losing money in each of the three previous years, on annual sales of around $2.5 billion, at plants in Levittown, Bordentown, and more than 70 other cities, which count Pepsico, Procter & Gamble and other household names as clients. Goldman Sachs, Citi and Deutsche Bank are leading the deal.