SAP Says Q3 Net Income Up 12 Pct, Cuts Outlook

GEORGE FREY

FRANKFURT (AP) — German business software maker SAP AG said third quarter net income rose 12 percent, as a drop in revenue was offset by a lower tax rate and better profit margins. But a negative outlook sent the shares down sharply.

SAP, based in Walldorf, said net income rose to euro435 million ($644 million) from euro389 million in the July-September period of 2008.

The company said total revenue fell, however, by 9 percent to euro2.5 billion from euro2.8 billion in the third quarter of 2008. Software revenue declined 31 percent, while service revenue fell 3 percent, SAP said.

SAP also said it expects software and software-related service revenues to decline by about 6 percent to 8 percent for the full year from euro8.6 billion in 2008. Earlier this year, the company had suggested a drop of only 4 to 6 percent for 2009.

The news sent SAP shares 7.25 percent lower to euro31.91 in Frankfurt morning trading.

The company said despite the lower revenue, outlook, and tough economic conditions, it was still making some small sales agreements and was focusing on longer-term deals with customers.