SAP Announces Solid Third QuarterBy Renee Boucher Ferguson | Posted 10-19-2006
SAP AG, after a less-than-stellar second quarter, rebounded nicely in its third quarter of 2006 with a 16 percent increase in new software license sales.
In the third quarter, announced Oct. 19, SAP's new license revenues rose to $866 million. But while SAP beat analyst expectations of $848 million in new license sales the company put a damper on its full-year software earnings expectations.
SAP is sticking to its guns with expected license revenue increases between 15 and 17 percent for the year, but said that the company is unlikely to reach the upper end of its guidance.
"From today's perspective, it appears less likely that product or software revenue growth will reach the upper end of the aforementioned ranges," said SAP Chief Financial Officer Werner Brandt, during the company's Q3 earnings call with analysts and press.
Despite the cautious gesturewhich some analysts suggest stems from increasing pricing pressure from main rival OracleSAP did say that it is likely to exceed its earnings-per-share guidance for 2006 of $7.32 to $7.54.
SAP's third revenues of $2.84 billion were in line with analyst expectations.
SAP's CEO Henning Kagermann said pricing is "tough but its stable."
During the earnings call, SAP pointed to some strong metrics for growth in the quarter. In the midmarket the company's channel partners grew 22 percent and customers grew 36 percent.
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