Mid-morning Monday SAP confessed that the bottom suddenly fell out of its sales in the last two weeks of September as the economy tanked and the company found it increasingly hard to sign contracts.

CEO Henning Kagermann blamed liquidity and financing issues especially at mid-sized companies – but did not identify problem geographies – and said that SAP’s Q3 numbers will be below expectations.

It said software revenues should be up 4%-5% year-over-year to between $1.02 billion and $1.04 billion. Total revenues should be up 13%-14% to between $1.97 billion and $1.98 billion (12% in the Americas, 14% in EMEA and 18% in APJ).

In July SAP claimed it was relatively immune and forecast total revenues would be up 24%-27%.

SAP stock dropped 13% to close at $39.68 down $5.97 on a day when the Dow plummeted 800 points at one point. It finished off 370 at 9,955.50.

When it reported its August quarter a couple of weeks ago, Oracle, SAP’s biggest competitor, claimed to be feeling no pain and conservatively predicted growth of 5%-15% this quarter. That of course was then; SAP’s pre-announcement is more real-time and reflects spending being put on hold. SAP, which has instituted both a hiring freeze and expense cuts, will report its numbers October 28.