SAP Preannounces, Says Sales And Earnings Are Up

The software vendor says it expects second-quarter revenue to be up 9% and profits to grow 15% from a year earlier.
SAP bucked a trend of dismal financial warnings, raising its revenue forecast.

The software provider said Friday that it expects its second-quarter revenue to be up 9% and its software revenue to grow 15% in the same period. SAP said it will report final figures on July 22 and that the numbers are expected to be largely in line with the expectations of analysts' projections for the second quarter.

A company spokesman said in an interview that "because of a series of disappointments" reported by other software vendors, the Germany-based firm decided to send a "signal of hope to the industry." Indeed, the upbeat report by SAP contrasted with waves of profit downturns announced by several software firms including Computer Associates, PeopleSoft, Siebel Systems, and Veritas.

SAP's ERP software competes in particular with software from PeopleSoft and Oracle, which have been locked in a battle over Oracle's hostile takeover bid. PeopleSoft has reported that the takeover fight has impacted its financials negatively.

Asked whether SAP was picking up business because of the Oracle-PeopleSoft combat, the spokesman said SAP's recent success in software sales "does not depend on weaknesses" or problems of other companies. He added, however, that IT managers view SAP as a "safe haven" from the "uncertainties" of the software business.

The spokesman said the preliminary results are in line with the expectations of analysts who follow SAP. He noted that quarter-to-quarter comparisons were not meaningful since seasonal fluctuations influence SAP's business. Typically, the second quarter is a strong one, he said.

SAP said it expected its second-quarter revenue will total approximately 1.78 billion euros ($2.2 billion) and its operating income will be between 380 and 390 million euros ($471.3 million to $483.7 million).

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