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Software AG, Europe’s second largest software company, is reorganising its US operations, after experiencing a sharp fall in sales in the region in the fourth quarter.
The German maker of business software said it would create a new “federal” unit in the US, to go after more public sector contracts. Staff will be drawn mainly from Software AG’s existing employees, but boosted with a number of new appointments.
Karl-Heinz Streibich, chief executive, also told the Financial Times he plans to personally spend more time in the US and is looking for ways to improve Software AG’s image in the region, although it is not yet clear how he will promote the brand.
“The public sector is a traditional customer for us and accounts for 30 per cent of revenues in the US. But now we are going for additional projects and having to fight to win,” Mr Streibich said.
“The difficulties just create an incredible energy to look at what we need to improve and do.”
He promised a slow and gradual recovery for the US business, with more details to be unveiled at a press conference on Tuesday, at which Mr Streibich will provide forecasts for the coming year.
The company provides software to a number of US public sector organisations, such as the City of New York, but has struggled to win new work in this area. Competitors such as Tibco, meanwhile, have been aggressively winning such business.
Software AG shares fell by more than 20 per cent last week after it revealed fourth quarter sales and profits that missed estimates. The US division saw a 40 per cent decline in sales, offsetting strong growth in Europe.
Mr Streibich said he was also planning to expand Software AG’s presence in Silicon Valley in the US, where the company bought Terracotta, the maker of Java software, last May. Most of the German company’s business has been on the east Coast to date, leaving Software AG with few ties to booming Silicon Valley technology businesses.
Mr Streibich said that while management focus would be mainly on fixing US problems, the company has not stopped looking for potential acquisitions.
“It is clear that our priority is to further grow the organic business, but acquisitions are not on hold,” he said. “Wherever we see a good opportunity, we will go for it.” The company’s last large deal was the $680m purchase of IDS Scheer in 2009, and Mr Streibich has in the past said he aimed to do a large deal every two to four years.
Mr Streibich, who has been CEO of Software AG since 2003, also said that he had not come under any investor pressure to step down, despite the company’s recent underwhelming performance.
“It is my ninth year as CEO of Software AG, and we have had 34 quarters of achieving all our key parameters. 2010 was our best year ever and in 2011 we have achieved the same level of sales and profit,” he said. “You have to look at it in totality.”
Source:http://www.ft.com/intl/cms/s/2/4d266828-420e-11e1-9506-00144feab49a.html#axzz1juMcHLhu

