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SAP trims 2002 sales target
FRANKFURT, Germany (Reuters) -- Germany's SAP AG succumbed to the uncertain climate in global technology spending, dropping its 2002 sales forecast on Thursday despite posting third quarter results which beat analysts forecasts. But Europe's biggest software maker said it still expected to record an operating profit margin of at least 21 percent even if full year sales remained relatively flat compared with the previous year. The group, which previously forecast 5-10 percent growth in 2002 sales, said it would no longer provide a forecast for the full year due to the unpredictable market environment. Few analysts believed SAP could maintain its sales forecast given the current weak environment for technology spending and most expect flat sales growth for the year. Third quarter operating profit before expenses for stock-related employee compensation and acquisition costs climbed to 316 million euros ($310.4 million) from 201 million a year earlier, well above most analysts' forecasts, while sales were in line with expectations at 1.7 billion euros from 1.65 billion a year earlier. Software licence sales, a key measure of underlying growth, slipped to 435 million euros from 447 million a year earlier but were also ahead of the consensus forecast. A Reuters poll of 19 analysts forecast operating profit between 153 and 400 million euros at an average of 253 million euros. Forecasts for sales ranged between 1.6 and 1.832 billion euros ($1.57-1.79 billion) at an average of 1.7 billion. Forecasts for software licence sales ranged between 371 and 472 million euros at an average of 417 million. Like its rivals, SAP has been hit by a sharp slowdown in spending on information technology this year as confidence in economic recovery has crumbled.
But the strong third quarter showing from the company adds to the relatively upbeat statement from information technology giant International Business Machines Corp SAP, which supplies business planning software to some 17,500 customers worldwide, has been cutting costs heavily to maintain profit in the face of the spending slowdown. American, European sales upSales in the key European and Americas regions rose in constant exchange rate terms, despite concerns about weak economic growth. Revenues in Europe, the Middle East and Africa rose 10 percent at constant currency rates to 913 million euros ($896.8 million), while sales in the Americas region were up 11 percent at 586 million euros, though without the exchange rate adjustment, sales in the region were down by four percent. The group also said it planned to buy back 100 million euros in stock over the next few months. It has already bought back 250 million euros worth of shares in 2002. SAP shares closed sharply lower on Wednesday after galloping ahead more than 40 percent in the week leading up to the results announcement as tech stocks across Europe bounced back from a headlong dive in September. But the stock is still down more than 60 percent since the start of the year and over two-thirds below the high for the year of 177.40 euros set in March.
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