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SAP ups target after beating forecast

Posted by iTech - 2005-10-20

Germany's SAP, the world's biggest maker of business software, raised its full-year outlook on Thursday after third-quarter license sales grew by a forecast-beating 20 percent to 590 million euros.
SAP said it would now target 12 to 14 percent growth in license sales this year, up from a previous forecast of 10 to 12 percent, which had been based on a dollar/euro rate of $1.30.

The average estimate of 23 analysts polled by Reuters was 552 million euros for license sales, which are an indicator of future revenues as they often bring license renewals and maintenance and service deals.

The result showed SAP extending its lead over arch-rival Oracle, which has been distracted by a major acquisition spree. SAP increased its global market share to 60 percent at the end of September from 58 percent at end-June.

In the United States, the world's biggest software market, SAP's share rose to 44 percent from 41 percent.

SAP's total third-quarter sales rose 13 percent to 2.01 billion euros, broadly in line with forecasts.

Pro-forma operating income -- excluding charges relating to acquisitions and employee stock options -- rose 9 percent to 520 million euros, also in line with the average poll estimate.

SAP considers its peer group to be the comparable business units of Microsoft, Oracle and Siebel Systems,, which has agreed to be bought by Oracle.

SAP trades at 26 times estimated 2006 earnings, almost twice as expensive as Oracle's 14 times estimated earnings for its fiscal year to May 2007, a reflection of its proven business model, while Oracle is in a transition period.

SAP's shares have performed broadly in line with the DJ Stoxx European technology index since the start of this year. They are due to start trading at 0700 GMT in Frankfurt.

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