SAP touts solid first-quarter growth

Business software maker SAP AG sounded a confident note Thursday as it announced net profit for the first quarter of 117 million euros (US$103.6 million), an increase of 109 percent over the figure of 56 million euros in the same period last year.

Earnings per ordinary share for the quarter stood at 0.36 euros, double the 0.18 euro figure announced a year previously, the company said in a statement. Quarterly revenue of 1.5 billion euros was up 29 percent over the 1.2 billion reported in the first quarter of 2000.

SAP said its strategy of focusing on building market share in electronic commerce software is paying off, despite what it called a "challenging" environment. In a conference call with analysts, SAP executives said they are comfortable sticking with their earlier forecasts for yearly results.

Even in the Americas, the worst-performing region for SAP, revenue was up 26 percent over last year's first-quarter figure, to 550 million euros. Europe, the Middle East and Africa, accounting for the lion's share of SAP's sales, showed growth of 31 percent, to 796 million euros. In the Asia-Pacific region, relatively insignificant for SAP, revenue rose 28 percent to 178 million euros.

For the first time, SAP provided details on revenue from selected software applications. MySAP SCM (supply chain management) brought in roughly 103 million euros, while mySAP CRM (customer relationship management) brought in around 67 million euros. In the conference call, Co-Chairman and Chief Executive Officer (CEO) Hasso Plattner said that the majority of SAP's revenues now come from Internet-related products.

SAP is optimistic about the near-term future, predicting that revenue growth for the nine months ending Sept. 30 will "slightly exceed" the 23 percent growth rate posted in fiscal year 2000. "If the market goes up again, then we will go up," Plattner said. "We cannot influence the market, but given how the market has gone in the last few months, we are very comfortable we will be sticking to our prognosis."

Plattner did concede that the economic climate is impacting SAP's hiring. The company increased its headcount by 1,000 this quarter, which Plattner said was on the low side. He said the company is waiting for positive indications from the market before it resumes hiring aggressively.

The market welcomed the results, with the company's shares on the Frankfurt exchange (SAP.FRA) posting a gain of 7.73 percent in morning trading, to 161.6 euros. Morgan Stanley Dean Witter upgraded its rating on SAP's stock on Wednesday morning, from "neutral" to "outperform."

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