SAP pulls guidance, bullish on margins

Good Q3

ComputerWire: IT Industry Intelligence

SAP AG axed its revenue guidance yesterday as it unveiled third quarter results that gave a boost to the lagging tech market.

The enterprise software giant turned in sales of 1.7bn euros ($1.65bn), up 3% on the year. Operating income rose 111% to 336m euros ($325.9m), while net income was up 446% to 202 euros ($195.9m). The Walldorf, Germany-based vendor's product revenue, at 1bn euros ($970m), was up 4%, while service revenue was up 1% to 642 euros ($622.6m).

For the year to date, sales were up 2% to 5.1bn euros ($5bn). Operating profits so far stand at 842m euros ($816.6m), up 14%, while net income grew 87% to 35m euros ($33.9m).

The results were better than analysts had hoped, and the company's shares surged 25.75% in the US to close at $16.85. Even the company's dropping of its earlier forecast of a 5% to 10% increase in sales this year was seen as a plus, as that target was seen as increasingly unfeasible.

SAP said that even though it expected to continue gaining market share, it was dropping the revenue forecast due to an unpredictable political and economic environment which made forecasting difficult. However, it threw investors a bone by saying that even if 2002 revenues were relatively flat on 2001, it expected operating margins to be 1% above last year's 20%.

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