SAP sees profits rise in solid third quarter

The enterprise software and services provider reports a 12 percent jump as it absorbs its purchase of Sybase, but misses Wall Street targets
Written by Ben Woods, Contributor

Business software provider SAP saw its profits rise by 12 percent in the third quarter of 2010, helped by solid sales in North and Latin America.

The Walldorf, Germany-based company, which specialises in enterprise business intelligence and analytic software, on Wednesday reported a quarterly profit of €501m (£438m), compared with €447m a year ago. Financial analysts had expected SAP to hit €553m.

Total revenue was €3.003bn, compared with €2.508bn the previous year — a jump of 20 percent.

"All of the regions reported growth in the third quarter, with particular strength in the US and the emerging markets of Asia, Europe and Latin America," said Werner Brandt, chief financial officer of SAP, in a statement.

The company said its gains in software and software-related services were helped by the continued popularity of SAP's core products, such as BusinessObjects. "We saw a good mix of revenues among small, mid-sized and large enterprises, and we had an increase in deal volume," said Brandt. "On the product side, business analytics remains a top priority among our customers and continues to be a principal growth driver."

SAP acknowledged the contribution from its acquisition of database and mobile services company Sybase, which was completed on 30 July.

"We were already delivering our solutions on-premise and on-demand. With the acquisition of Sybase, we now have the most complete and heterogeneous mobile platform in the industry and with it the added ability to deliver our solutions on-device as well," said Bill McDermott, co-chief executive of SAP, in the company's earnings statement.

The software and services provider reported that it had created 4,900 new jobs, but acknowledged that 4,350 of these encompassed people brought in via the acquisition of Sybase.

In a conference call after its earnings release, SAP stressed the "open" nature of its products in comparison with those of some of its competitors, and it emphasised its desire to develop an active ecosystem of developers, clients and partners to ensure future growth.

"Customers don't want to buy big proprietary stacks, and they don't want to be locked in to a single vendor consolidating the past. They want choice, openness, innovation and co-innovation," said McDermott during the call. "Growth will also come by leveraging the ecosystem as a force multiplier at all levels of SAP."

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