SAP Earnings Jump Based on U.S. Software Sales

 
 
By Renee Boucher Ferguson  |  Posted 2004-04-22
 
 
 

SAP AG, the worlds largest e-business software provider, said today its first quarter earnings for 2004 jumped significantly due to stellar sales in the United States.

SAP, of Walldorf, Germany, said its net income for the quarter increased 23 percent to $271 million, compared to $220 million during the first quarter of 2003.

Software sales in the United States increased 45 percent over last years first quarter to $150 million, from $104 million in the first quarter of 2003.

"We reported another excellent quarter from our U.S. organization, which is demonstrating strong sales execution," said Henning Kagermann, CEO of SAP, in a statement.

Overall, SAP saw a 5 percent growth in its software business, even with revenues down by 4 percent in the EMEA region, and down by 1 percent in its home state of Germany—indicative of its difficulty in Europe for this just-passed first quarter. On the whole, SAP reported software revenues of $439 million for this first quarter, compared with $418 in total software sales for the first quarter in 2003.

At the same time, total revenues for the companys first quarter of 2004 increased by about 2 percent to $1.9 billion, compared with $1.8 billion for the first quarter of 2003.

Kagermann said the companys first quarter results support its expectations for the year. SAP expects software revenues to increase by about 10 percent in 2004, compared with last year.

Interestingly SAP compared its revenue gains against its peer group, newly defined as four companies: Microsoft Corp, Oracle Corp, PeopleSoft Inc. and Siebel Systems Inc.

SAPs share of the business applications market amongst the group increased to 54 percent for the quarter, compared with 51 percent during the same period last year based on comparable software revenues. For this quarter SAP ousted i2 Technologies Inc. from the group, which it previously had considered competition in the applications sector, and added Microsoft.

This move could have further reaching implications.

SAP is the unwitting participant in an ongoing federal law suit brought on by the U.S. Department of Justice to block Redwood Shores, Calif.-based Oracles $9.6 billion hostile bid to acquire PeopleSoft.

The Justice Department said in its suit that Oracles acquisition of PeopleSoft, based in Pleasanton, Calif., would be bad for competition in the upper echelons of the software industry, which it defined as consisting of three companies: Oracle, PeopleSoft and SAP.

The crux of Oracles defense is its definition of the top tier of the software market, which it says is much broader than three companies. The company points specifically to Microsoft, of Redmond, Wash., as an encroaching competitor—a claim Microsoft has denied in testimony to the Justice Department.

SAP is siding with Oracle in its definition of competition at the top levels of the applications market.

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