SAP Earnings Beat Estimates

Fans could be disappointed by its failure to raise guidance.
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Updated from 8:27 a.m. EDT

Strong software sales in the U.S. helped

SAP

(SAP) - Get Report

beat expectations as it posted a 16% rise in second-quarter net income and a 13% jump in total revenue.

But in what may prove to be something of a disappointment, the German software giant failed to raise its existing forecasts for the rest of the year. Indeed, shares were off 89 cents, or 2%, to $44.03 in recent trading on Thursday. SAP reported its results hours before the opening bell and did not immediately convert the numbers to dollars.

Net income in the June quarter was 289 million euros, or 0.93 euros a share, compared with 249 million euros, or .80 euros a share. Total revenue for the quarter was 2.02 billion euros, compared with 1.8 billion euros in the same quarter last year.

Excluding items, the company earned a profit of 314 million euros, or 1.01 euros a share. On the same basis, analysts polled by Thomson First Call were expecting a profit of 0.98 euros a share on revenue of 1.94 billion euros.

Worldwide software revenues grew 16% to 576 million euros, while the company's software sales in the U.S. grew by 24% to 174 million euros. Excluding currency fluctuations, revenue in the U.S. would have been 3% higher, the company said.

"We are pleased to report another quarter of solid revenue, operating income and earnings per share growth," said Henning Kagermann, CEO of SAP. "Due to strong software revenue results in each region, we continued to gain share against our peer group and extend our lead in the U.S. market."

Although industry analysts agree that SAP is gaining market share in the U.S., the company's boast that it has overtaken

Siebel Systems

(SEBL)

in the market for customer relationship management software is not widely accepted.

The company reiterated earlier guidance, saying that it expects full-year 2005 software revenue to increase in a 10% to 12% compared with 2004. Pro forma earnings per share, which excludes stock-based compensation, acquisition-related charges and impairment-related charges, will range from 4.70 euros to 4.80 euros.