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October 27, 2010, 3:38 AM EDT
By Matthew Campbell
(Updates with share price starting in first paragraph.)
Oct. 27 (Bloomberg) -- SAP AG, the world?s biggest maker of business-management software, said third-quarter profit rose 12 percent as clients revived spending, missing analyst estimates. The stock had its biggest intraday drop since October last year.
Net income climbed to 501 million euros ($692 million), or 42 cents a share, from 447 million euros, or 38 cents, in the year-earlier period, the company said in a statement today. Analysts had predicted profit of 553 million euros, according to the average of 16 estimates compiled by Bloomberg. Revenue rose 20 percent to 3 billion euros.
The results were ?all in all OK, but nothing spectacular,? said Stephan Wittwer, an analyst at Landesbank Baden-Wuerttemberg in Stuttgart. ?The price pressure has relaxed a bit? from SAP?s big corporate clients, who pushed to lower costs during the global recession, he said.
SAP, like rival Oracle Corp., is looking to expand into new business areas to protect market share. The Walldorf, Germany- based company, which provides software for the order fulfilment behind Apple Inc.?s iTunes download system and used by companies for payroll management, is expanding to applications accessed via the Internet and mobile devices.
SAP shares fell as much as 4.1 percent to 36.75 euros in Frankfurt trading and were down 3.2 percent at 37.09 euros as of 9:29 a.m. Before today, the shares climbed 16 percent this year.
?As customers continue to reengage, seeking opportunities to grow their businesses and differentiate themselves from their competitors, we are able to help them,? Co-Chief Executive Officer Bill McDermott said in the statement.
All Regions
SAP?s software and related services sales rose 20 percent from a year earlier to 2.32 billion euros. Software license sales, seen as a gauge of future maintenance and upgrade fees, advanced 25 percent to 656 million euros. The company is also targeting greater revenue from so-called ?on-demand? software, which doesn?t involve annual licence fees from clients.
The company?s growth opportunities are ??sustainable,?? co- CEO Jim Hagemann Snabe said in an interview on Bloomberg TV today.
?All the regions reported growth in the third quarter, with particular strength in the U.S. and the emerging markets of Asia, Europe and Latin America,? Chief Financial Officer Werner Brandt said in the statement.
The third-quarter figures include the contribution of Sybase Inc., which SAP bought this year.
SAP reiterated its full-year outlook of non-IFRS software and software-related service revenue growth of 9 percent to 11 percent at constant currency rates. It expects 2010 non-IFRS operating margins to be in the 30 percent to 31 percent range.
Oracle?s Play
Oracle in September reported fiscal first-quarter profit and revenue that beat analysts? estimates, helped by sales of database software and Sun Microsystems servers.
Net income at the Redwood City, California-based company climbed 20 percent to $1.35 billion.
The world?s second-largest business software manufacturer, wants to ?play in every important industry,? Oracle Chief Executive Officer Larry Ellison said last month.
Building on a run of more than 65 acquisitions during the past five years, Oracle is looking to purchase semiconductor companies and makers of industry-specific software, he said.
--Editors: Vidya Root, Simon Thiel.
To contact the reporter on this story: To contact the reporter on this story: Matthew Campbell in Paris at mcampbell39@bloomberg.net.
To contact the editor responsible for this story: Vidya Root at vroot@bloomberg.net
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(Updates with share price starting in first paragraph.)
Oct. 27 (Bloomberg) -- SAP AG, the world?s biggest maker of business-management software, said third-quarter profit rose 12 percent as clients revived spending, missing analyst estimates. The stock had its biggest intraday drop since October last year.
Net income climbed to 501 million euros ($692 million), or 42 cents a share, from 447 million euros, or 38 cents, in the year-earlier period, the company said in a statement today. Analysts had predicted profit of 553 million euros, according to the average of 16 estimates compiled by Bloomberg. Revenue rose 20 percent to 3 billion euros.
The results were ?all in all OK, but nothing spectacular,? said Stephan Wittwer, an analyst at Landesbank Baden-Wuerttemberg in Stuttgart. ?The price pressure has relaxed a bit? from SAP?s big corporate clients, who pushed to lower costs during the global recession, he said.
SAP, like rival Oracle Corp., is looking to expand into new business areas to protect market share. The Walldorf, Germany- based company, which provides software for the order fulfilment behind Apple Inc.?s iTunes download system and used by companies for payroll management, is expanding to applications accessed via the Internet and mobile devices.
SAP shares fell as much as 4.1 percent to 36.75 euros in Frankfurt trading and were down 3.2 percent at 37.09 euros as of 9:29 a.m. Before today, the shares climbed 16 percent this year.
?As customers continue to reengage, seeking opportunities to grow their businesses and differentiate themselves from their competitors, we are able to help them,? Co-Chief Executive Officer Bill McDermott said in the statement.
All Regions
SAP?s software and related services sales rose 20 percent from a year earlier to 2.32 billion euros. Software license sales, seen as a gauge of future maintenance and upgrade fees, advanced 25 percent to 656 million euros. The company is also targeting greater revenue from so-called ?on-demand? software, which doesn?t involve annual licence fees from clients.
The company?s growth opportunities are ??sustainable,?? co- CEO Jim Hagemann Snabe said in an interview on Bloomberg TV today.
?All the regions reported growth in the third quarter, with particular strength in the U.S. and the emerging markets of Asia, Europe and Latin America,? Chief Financial Officer Werner Brandt said in the statement.
The third-quarter figures include the contribution of Sybase Inc., which SAP bought this year.
SAP reiterated its full-year outlook of non-IFRS software and software-related service revenue growth of 9 percent to 11 percent at constant currency rates. It expects 2010 non-IFRS operating margins to be in the 30 percent to 31 percent range.
Oracle?s Play
Oracle in September reported fiscal first-quarter profit and revenue that beat analysts? estimates, helped by sales of database software and Sun Microsystems servers.
Net income at the Redwood City, California-based company climbed 20 percent to $1.35 billion.
The world?s second-largest business software manufacturer, wants to ?play in every important industry,? Oracle Chief Executive Officer Larry Ellison said last month.
Building on a run of more than 65 acquisitions during the past five years, Oracle is looking to purchase semiconductor companies and makers of industry-specific software, he said.
--Editors: Vidya Root, Simon Thiel.
To contact the reporter on this story: To contact the reporter on this story: Matthew Campbell in Paris at mcampbell39@bloomberg.net.
To contact the editor responsible for this story: Vidya Root at vroot@bloomberg.net
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