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First the bad news: revenues were down in Q2 and a weak dollar and a sluggish global economy means that sales will be weak, at least for the rest of the year. for SAP, Europe's biggest software house.

Now for the good news for SAP shareholders: cost-cutting means that profits are up and are higher than consensus analyst forecasts. Also SAP, by its own estimates, gained share against its major rivals, Oracle, Peoplesoft and JD Edwards, during the quarter.

Group revenues in Q2 were €1.2bn, down 8 per cent year-on-year, but up 2 per cent, if adjusted for currency differences. Operating profit before charges stock-based compensation and acquisition was €388m (2002: €324m), an increase attributed to strict cost controls. Net income advanced to &euro,219m, a big leap from last year's loss of &euro232m, even when you factor in the €300m one off charge factored into the latter figure.

This year the dollar has fallen 25 per cent against the euro, the currency in which SAP reports its earnings; there is little likelihood of a return to a strong dollar, until the US gets to grips with its current account and trade deficits. Which means that SAP has to pedal (and peddle) a lot harder in America to stand still. ®

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