Jan. 28 (Bloomberg) -- SAP AG, the world’s biggest maker of business-management software, will slash more than 3,000 jobs and freeze salaries this year as the economic slump hurts demand.

The workforce will be reduced to 48,500 this year, the Walldorf, Germany-based company said today in a statement. SAP employed 51,536 people at the end of 2008. Costs to eliminate jobs will weigh on profit margins this year and save as much as 350 million euros ($464 million) annually starting in 2010, SAP said.

“They’ve done well on costs in the fourth quarter, which is necessary, as growth is difficult,” said James Dawson, a London-based analyst at Morgan Stanley with an “overweight” rating on SAP shares. “We’re looking at a flat earnings year when you piece it all together.”

SAP’s measures add to more than 80,000 job cuts announced this week alone by companies including STMicroelectronics NV, Caterpillar Inc. and Sprint Nextel Corp. The redundancies are the biggest in SAP’s 36-year history and are a backlash after it added about 1,200 workers last year and was voted Germany’s best employer by a business magazine in 2006.

Pay Freeze

The German company will freeze salaries this year and put stock buybacks on hold, Chief Financial Officer Werner Brandt said in a presentation in Frankfurt. SAP saved 220 million euros by curtailing travel and freezing hiring, he said.

SAP rose 5.3 percent to 27.60 euros in Frankfurt trading. Before today, the stock lost 23 percent in six months.

The company said today that the president of its North American sales unit would take a leave of absence for personal reasons. Greg Tomb will be replaced by another executive, Rob Enslin. SAP expects Tomb to return later this year in a new role.

SAP forecast its operating margin, excluding acquisition- related writedowns, will fall to between 24.5 percent and 25.5 percent this year from 28.2 percent in 2008. The outlook includes charges to cut jobs. The company still has a mid-term target of reaching a profit margin of 35 percent, co-Chief Executive Officer Leo Apotheker said at the presentation.

Hard to Predict

The company said it won’t forecast software and software- related service revenue for 2009, citing “the continued uncertainty surrounding the economic and business environment.”

“We can’t isolate ourselves from the global economic crisis,” Apotheker said in a Bloomberg Television interview. “To give a precise sales outlook is extremely risky, if not almost playing the casino.”

SAP will propose keeping the dividend at the level of 30 percent of net income, CFO Brandt said. The company doesn’t plan to buy back stock in 2009, after spending more than 400 million euros on buybacks last year, he said.

“Of course we will need to see how the economic situation develops,” Brandt said. “Should the development be positive, we will propose buying back shares.”

The company also said fourth-quarter net income climbed to 850 million euros from 756 million euros a year earlier. Analysts had predicted profit of 747 million euros, the median of 10 estimates in a Bloomberg survey.

License revenue, a gauge of future fees from maintenance and consulting, fell to 1.32 billion euros from 1.42 billion euros a year earlier, SAP said.

Analysts’ Estimates

Analysts had predicted license sales of 1.37 billion euros, the median of 28 estimates in a survey by Vara Research GmbH on behalf of SAP. Revenue from software and related services increased to 2.67 billion euros from 2.47 billion euros. Analysts anticipated 2.70 billion euros.

Total sales rose to 3.49 billion euros from 3.24 billion euros. The median estimate of 11 analysts was 3.44 billion euros.

“We have arrived in a new world in 2009,” SAP co-CEO Henning Kagermann said at the presentation. “The economic crisis will be here to stay for some time.”

SAP announced orders last year from customers including Deutsche Postbank AG, the U.S. state of Louisiana and Singapore supermarket operator Dairy Farm International Holdings Ltd.

“The cost containment measures will allow us to adapt to the tough market conditions and ensure the long term competitiveness of the company,” Apotheker said in the release. “We expect 2009 to be a year of limited visibility, making it increasingly difficult to project sales in this environment.”

Last week, SAP reiterated the timing for the handover between the current co-CEOs, with Apotheker set to take over the day-to-day running of the German company when Kagermann steps down in May.

SAP was among the last major German companies to create a works council, overcoming resistance from some of the founding members, who continue to be SAP’s dominant shareholders.

Talks with the works council have started and German cuts may be as much as 4 percent of the total in the country, Apotheker said. No firings are planned in Germany. “If the environment changes radically we may have to review that policy,” he said.

To contact the reporter on this story: Frances Robinson in Frankfurt at frobinson6@bloomberg.net

Last Updated: January 28, 2009 20:43 EST