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SAP Earnings Rise 14%

The software giant sees higher margins.
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jumped overnight after the German software maker reported strong fourth-quarter earnings and predicted a big 2006.

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SAP earned $759 million, or $2.46 a share, in the latest quarter, up 14% from $667 million, or $2.14 a share, a year ago. Sales were $3.38 billion in the most recent quarter compared with $2.95 billion a year ago. Software revenue rose 18% from a year ago to $1.45 billion in the latest quarter.

In 2005, "we accelerated peer group share gains as well as the adoption of our Enterprise Services Architecture; we delivered the first services-enabled business software suite in the industry," SAP said. "Most notably, we continued to demonstrate that organic growth is a very effective way to achieve success in this industry, and that it benefits our customers, partners and shareholders."

For 2006, SAP expects pro forma operating margin to rise by one-half to 1 percentage point, while pro forma earnings will be $7.13 to $7.38 a share. Product revenue should rise 13% to 15%, while 2006 software revenue should rise by 15% to 17%.

SAP shares were up as much as 9% in overnight European trading.