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SAP's earnings jump

July 19, 2001 Posted: 0958 GMT

LONDON (CNN) -- Europe's largest software company SAP shrugged off the global economic slowdown by posting a 78 percent jump in second-quarter net profits.

The German business software company said on Thursday net income for the three months to June 30 rose to graphic206 million, or graphic0.65 per share, compared with graphic116 million, or graphic0.37 a share, in the year-ago quarter.

SAP achieved its better-then-expected results against a background of an economic slowdown and lower corporate spending, particularly in the U.S., and as technology companies on both sides of the Atlantic reduced profit forecasts.

The world's largest maker of business software was also upbeat on its prospects for the rest of the year, unlike U.S. rivals i2 Technologies (ITWO: Research, Estimates) and Siebel Systems (SEBL: Research, Estimates), which on Wednesday forecast more gloom.

SAP has benefited from its large base of existing customers and increasingly wide acceptance of its e-business product. After a difficult two-year transition period, SAP has emerged as one of the dominant forces in Internet-based business-to-business software.

The German company's earnings per share would have been even higher if it excluded charges related to the acquisition on March 30 of San Jose, California-based software firm TopTier for $400 million in cash, as part of its global expansion.

Without the TopTier costs earnings per share rose 92 percent to graphic0.71 compared with graphic0.37 in the same three months a year ago.

SAP said revenues rose 24 percent over the same period last year to graphic1.85 billion. Second-quarter operating income, before charges for stock-based staff compensation programmes and the TopTier acquisition costs, rose 72 percent to graphic424 million compared with graphic246 million in 2000.

The company said its operating margin, excluding items, improved to 23 percent from 16 percent in the same quarter a year ago.

Earnings before interest, taxes, depreciation and amortization (Ebitda) more than doubled to graphic450 million from graphic206 million. Ebitda is a measure of earnings for companies with large debts.

SAP also confirmed its earlier expectations for the first nine months of 2001 and extended its forecasts for the rest of the year.

"SAP expects revenue for the full year 2001 to grow by more than 20 percent," the company said. "Operating margin, excluding stock-based compensation and acquisition-related charges, are expected to exceed the 20 percent achieved in 2000 by 1 to 2 percentage points," it added.

SAP shares (FSAP) climbed almost 9 percent to graphic155.5 in Frankfurt on Thursday after the results were announced.

The stock has jumped some 33 percent since the beginning of the year and has easily outperformed the Eurostoxx tech index, which has slumped almost 45 percent in the same period.

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• SAP raises Commerce stake
June 29, 2001


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