SAP: Business on track; Fourth quarter revenue up 10 percent

SAP provided another data point on the health of the tech economy, outlining that its fourth quarter is on track.

On Monday, SAP joined IBM in announcing that the fourth quarter was strong. SAP (all resources, BTL posts) said fourth quarter revenue is expected to be about 3.25 billion euros, up 10 percent from the same quarter in 2006. If you factor out the currency impact (the euro is stronger than the dollar) SAP's revenue growth was about 14 percent. Revenue for 2007 was 10.26 billion euros, up 9 percent from 2006.

Those projections are in line with current estimates. A few key data points from SAP's statement:

• Fourth quarter software and software related service revenue is projected to be about 2.48 billion euro, up 13 percent from a year ago.
• Software revenue is expected to be 1.41 billion euro, up 14 percent from a year ago.
• SAP claims enterprise software market share of 28.5 percent for the last four quarters, up from 24.5 percent from a year ago.
• Operating margin for 2007 is expected to be about 26.5 percent, down from 27.3 percent in 2006. SAP took a currency hit of 30 basis points. The company also took a hit from its investment in BusinessByDesign.
• Software and software related services revenue for the fourth quarter is expected to 0.78 billion euro in the Americas, up 7 percent. In Europe and the Mideast region, software and software related services revenue in the fourth quarter is expected to be 1.4 billion euro, up 13 percent. Asia Pacific software and software related services revenue is projected to be 0.96 billion euro, up 19 percent.

Cowen analyst Peter Goldmacher in a research note that SAP's statement indicates that the company will have an in line quarter. He maintained an underperform rating. "Despite growth in revenues, the estimated contraction in EPS indicates that earnings were pressured by the company's investment in the mid market," said Goldmacher in a research note.