SAP Delivers Big Quarter

SAP's ( SAP) second-quarter earnings rose 14% from a year ago, driven by major sales and market-share gains in the U.S. and a decline in overhead costs.

The company previewed the results July 9, relieving investors who worried the slowdown reported by Veritas ( VRTS), PeopleSoft ( PSFT) and Siebel ( SEBL) -- and reiterated Wednesday by Salesforce.com ( CRM) -- would impact SAP.

The Germany-based business software vendor earned $306.3 million, or 98 cents a share, in the three months to June 30, compared with earnings of $268 million, or 87 cents a share, last year. Revenue rose 9% to $2.19 billion. Excluding various expenses, SAP put up pro forma earnings of $1.07 a share in the second quarter.

SAP's second-quarter software revenue was $596 million compared with $530 million a year ago, reflecting a 53% jump in U.S. software revenue to $172 million. In constant currency, U.S. software revenue surged 70%. The company claimed its worldwide software share vs. a four-company peer group rose 4 percentage points to 55% in the second quarter, using a four-quarter rolling average.

Most of SAP's expense measures rose at far slower rates than revenue, while general and administrative costs actually fell 6% to $114 million in the second quarter. The company's six-month operating margin was 22% in 2004, up 2 percentage points from a year ago.

The company left its full-year guidance intact, repeating that it expects overall software revenue to rise 10% over 2003, with earnings coming in at $5.25 to $5.38 a share. The stock was up 9 cents, or 0.2%, to $38.05.

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