SAP announces restructuring, affecting 8K workers in AI push
German software company SAP SE (SAP) announces a restructuring plan that will ultimately impact up to 8,000 workers' jobs as the developer pivots to artificial intelligence. SAP's stock moves higher by nearly 7% in Wednesday's pre-market.
Yahoo Finance Live talks about employment narratives as more companies adopt AI and tech leaders implement a wave of layoffs in 2024.
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Editor's note: This article was written by Luke Carberry Mogan.
Video Transcript
- All right, we're also switching gears here and looking at shares of SAP after announcing a restructuring plan. It's going to impact 8,000 jobs. Now, the company is shifting more of its focus towards artificial intelligence. AI, certainly the buzzword here at the start of 2024 with these tech earnings.
So as part of this move, the company saying its operating profit is going to rise to near $11 billion in the next year. And taking a look at some of these moves-- and Brad, I'm going to hand it over to you, just because of your experience at SAP. And you were there at a former restructuring here. But it's part of a broader trend, right?
Of companies pouring more money into AI, the reallocating their business as a result. They're not necessarily-- and they're not, eliminating 8,000 jobs. They're. Looking to re-skill some of that workforce and also figure out what makes the most sense as SAP positions themselves better for this next round here of technology.
- Yeah. My first employer out of school. And one of the huge things that I remember back then, in a previous kind of restructuring or re-framing of how this business sees its revenue growing in that next inflection point, that was back when cloud was taking off and the cloud solutions business, back in 2011, 2012. I remember, internally, the sense of how big an investment, both in reallocation of headcount and in the types of solutions that were actually being put into market, the company was making around some of those advancements in cloud and where it was making strategic acquisitions as well.
Remember, a lot of these ERP companies, they abide under the acquire-to-grow type of mindset or mantra. But for SAP and the internally grown solutions, that's where it's going to be interesting to see where some of this reallocation comes to fruition now in this next inflection point that they're anticipating in artificial intelligence. And just to put some numbers on this. I mean, the stock back then was trading around $60 a share.
Look at it here today. It's trading at about $163 a share right now. So all of these things considered, there's a massive upside that I think the executives are seeing and taking the kind of roadmap approach to say, where do we put people in the right positions in order to see that actually come to life?
