SAP Q3 profits rise 25%

SAP this morning announced a 25% year-on-year increase in net profits. Revenues dipped, but SAP was buoyed enough to revise its full-year predictions.

SAP this morning announced a 25% year-on-year increase in net profit, driven by increased software license sales in the U.S. and continued cost-cutting efforts worldwide.

In the July-through-September span, revenue dipped 3% to $1.9 billion (1.652 billion euros), compared with the same quarter the year before. SAP executives said the decline can be attributed to exchange rate fluctuations.

In an earnings conference call, the German software maker said net income for the third quarter, which ended Sept. 30, jumped 25% to $292 million (252 million euros). This compares with net income of $235 million (202 million euros) for the same period in 2002.

SAP continued to have a strong showing in the United States, and the company predicted its full-year performance would be better than originally forecast.

"We do not expect to see much of a change in the current economic and competitive environment," said SAP chairman and CEO Henning Kagermann. "We expect to continue to benefit whether consolidation takes place or not."

Operating profit was up 23% at $482 million (413 million euros). When it came to software revenue specifically, the numbers rose to 433 million euros, or $505 million, virtually flat from 435 million euros in 2002. However, SAP said that, once currency fluctuations were accounted for, software revenue was up 7%.

Leo Apotheker, a member of the extended management board of SAP, said during the conference call that sales of myCRM software to financial services companies has been strong, but continues to be weak in North America and Asia. SAP is seeing banks and other large global customers use NetWeaver to integrate their legacy financial systems and custom-built components.

"We are looking forward to enhancing our sales in this sector significantly," Apotheker said.


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