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SAP meets Q1 forecasts but software sales fall

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CIOL Bureau
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James Mackenzie

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FRANKFURT: Germany's SAP AG on Thursday posted first-quarter results which

broadly met market forecasts as strong consulting revenues helped offset a

bigger-than-expected fall in software license sales.

Europe's biggest software maker reiterated a full-year sales and margin

forecast it made in January but said market conditions remained

"challenging", echoing the downbeat tone heard across the sector in

recent weeks.

SAP said first-quarter sales rose nine per cent to 1.66 billion euros ($1.46

billion), as an 18 per cent rise in consulting revenues helped make up for a 12

per cent drop in software license revenues to 402 million euros.

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"Conditions for software purchases are challenging, and while Europe

remains relatively strong, businesses in the Americas are taking a more

deliberate and measured approach to new software investments," SAP said in

a statement.

Operating profit before charges for stock-based compensation and acquisition

charges rose two per cent to 237 million euros, while net profit, adjusted for

the impact of SAP's loss-making US affiliate Commerce One and acquisition

charges, rose to 121 million euros from 117 million a year earlier.

A Reuters poll of 24 analysts forecast sales of 1.53-1.744 billion euros at

an average of 1.678 billion. Sales of software licenses were seen at 451 million

euros. Operating profit, including the cost of staff incentive programs and

acquisition costs, was forecast in a range of 157-274 million euros and at an

average of 202 million.

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Europe leads revenue growth

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SAP said revenues in the European region rose 11 per cent to 886 million

euros, while revenues in the Americas were up just five per cent in currency

adjusted terms at 587 million euros. Asian revenues rose four per cent to 185

million euros.

The company reiterated its forecast of a 15 per cent rise in 2002 sales with

operating margins of at least 21 per cent, saying it expected a much stronger

second half to the year.

SAP's comments match the gloom hanging over the rest of the sector following

a relentlessly downbeat string of results from some of the German group's main

US peers so far this month.

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Late on Wednesday, Siebel Systems, the market leader in customer and sales

software, posted a bigger-than-expected fall in first-quarter sales, a day after

i2 Technologies, SAP's main rival in supply chain management software, posted a

$31.5 million first-quarter loss.

Despite some signs of economic revival in both the United States and Europe,

firms have been reluctant to splash out on big new IT systems, limiting spending

to projects promising an immediate return on investment.

SAP shares have dropped sharply amid a spate of profit warnings from rivals

in recent weeks, falling more than 10 per cent since the end of March.

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