×

Revenue Now the Focus of Investors: SAP CEO

His day job is running SAP, the German technology giant that battles for supremacy with Oracle in the business software market across the world.

His company’s software allows you to watch supply chains across the world and gives him a unique position to understand the flow of trade across the world, so when Bill McDermott, the co-CEO of SAP speaks, it is worth paying attention.

“Investors are watching revenue closely,” said McDermott during a two hour interview with CNBC’s Squawk Box Europe on Tuesday following news that Alcoa had kicked off earnings season by missing the street on revenues.

“The third quarter (of) 2008 saw revenues across the board come under pressure as the financial crisis hit sentiment. Following that period into 2009, investors were happy to focus on profitability rather than revenue. That has changed. The market is focusing on revenue as a long-term indicator of a company’s health,” said McDermott.

Inflation fears are stalking investors and central bankers across the world, but McDermott believes the prospect of second round effects on wages is actually good news.

“Higher wages are due to higher revenues. Employees do well when a company does well. This is good as it shows the global recovery is on track,” he said.

“There is more pressure on wages in the emerging world than in the developed world.”

SAP is in a closed period so cannot discuss current trading ahead of the release of its first-quarter earnings later this month, but McDermott is confident.

He believes stocks are doing well because the world is doing well.

“The market has room to run. Historically stocks are cheap and investors will want to buy them,” he said.