FT.com / Companies / IT - Strong holiday sales lift SAP shares

FT.com / Companies / IT - Strong holiday sales lift SAP shares

Strong holiday sales lift SAP shares
By Gerrit Wiesmann in Frankfurt

Published: January 15 2008 01:19 | Last updated: January 15 2008 01:19

German business-software company SAP said preliminary results showed strong sales in the Christmas quarter, lifting full-year growth of a key performance indicator above a previous forecast.

The announcement cheered investors, who have worried the credit squeeze could damp economic growth and corporate spending on software that runs inventories or client data.

The Walldorf-based company said sales of software and related services rose 13 per cent to €2.48bn ($3.69bn) in the fourth quarter and would have risen 17 per cent had exchange rates stayed stable.

Full-year sales of software and services rose at the same rate to €7.44bn, beating a forecast by SAP executives that sales would grow 12-14 per cent, expressed in constant currencies.

The world’s largest business software manufacturer last year introduced web-based programmes to lure small companies as sales of conventional software to global corporations slowed.

In consequence, SAP has shifted to calibrating its performance through revenues from software and services, rather than software alone – although even this older measure was strong.

Software sales, long seen as an indicator of follow-on maintenance revenues, rose 14 per cent – or 18 per cent at constant currencies – to €1.4bn in October, November and December.

This figure, slightly above analysts’ forecasts, helped push SAP shares on Monday to €33.70, 2.7 per cent higher than Friday’s close – although still below a high of €41.76 seen in September.

The company in October took investors by surprise when it announced the takeover of Business Objects, a business analytics company, for €4.8bn, SAP’s first big acquisition.

The move rattled investors just as they were starting to regain confidence in the company after a January announcement that its web-based service for small companies would reduce profitability in 2007.

SAP said on Monday its operating margin would, as forecast a year ago, fall to 26.5 per cent from 27.3 in 2006, with the dollar’s slide against the euro lobbing 0.3 points off profitability.

The company plans to release detailed results and give a forecast for this year on 30 January.

This week, it will give more details about the integration of Business Objects.
Copyright The Financial Times Limited 2008