SAP first quarter profits climb 10%

SAP has posted its financial results following a turbulent quarter for the company, reporting a 10% jump in profit on increased sales of its software and support services.

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SAP has posted its financial results following a turbulent quarter for the company, reporting a 10% jump in profit on increased sales of its software and support services.

Net income for the first quarter was €310m (£206m), up 10% from €282m (£191m) reported for the same quarter a year earlier, SAP said.

Total revenue climbed 6% to €2.17bn (£1.47bn), from €2.04bn (£1.38bn) in the first quarter of 2006. Revenue from software and related services increased 9% to €1.52bn (£1.03bn), from €1.39bn (£944m) a year earlier.

The company ended the quarter with 8,500 customers on its SAP enterprise resource planning (ERP) applications, more than double the number a year earlier, while sales of its NetWeaver integration software climbed 40% to €156m (£105m), SAP said.

The results follow a busy quarter for SAP in which it was sued by its biggest rival and lost one of its most prominent software strategists. The company has also been battling slower revenue growth as it competes fiercely with Oracle.

On 22 March, Oracle filed a lawsuit against SAP, accusing it of "corporate theft on a grand scale." Workers at SAP's TomorrowNow subsidiary allegedly posed as Oracle clients and stole documents and software that Oracle uses to provide support service for its clients. Its goal was to offer cut-rate support service to Oracle customers, according to Oracle.

SAP has not commented on the charge except to say it will defend itself vigorously.

A week later Shai Agassi, president of SAP's product and technology group, announced plans to leave the company on 1 April. Agassi had been in line to become joint CEO of SAP when Henning Kagermann left that position, and was unhappy when Kagermann was asked to stay in his job for an extra two years.

SAP has since realigned its management and said it has enough expertise in the company to weather Agassi's departure. Later this year it will roll out a brand new suite of on-demand business applications designed to grow its business in the midmarket.

Kagermann said that he was pleased with the company's results this quarter, and SAP's financial forecast for the year remains unchanged. The company expects software and software-related service revenue to increase 12% to 14% in 2007 at constant currency rates.

In January the company reported weaker than expected growth for the fourth quarter of 2006 due to slow sales in the Americas and Asia Pacific.

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