SAP turns in full year 10 per cent growth to reaffirm market leadership

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SAP reaffirmed its leadership of the applications software market with another set of good results, recording 10 per cent growth that outstripped its rivals.

Among the highlights for the German giant was the 10 per cent increase in licence revenues and the prospect of growth of as much as 12 per cent in 2005. US software sales did particularly well, up 27 per cent to €625m in the year to 31st December. In contrast, software revenues were flat in Europe, the Middle East and Africa in the final three months of the year.

Worldwide licence revenues in the fourth quarter rose 8 per cent rise to €1bn. Total revenues for the quarter were €2.4bn, compared with €2bn last year, while full-year sales rose 7 per cent to €7.5bn. Net income rose 22 per cent to €1.3bn - or €4.22 per share - in the year. In the final quarter net income rose 29 per cent to €542m.

"2004 was another outstanding year for SAP," chairman Henning Kagermann said. "As promised, we delivered a year of double-digit growth in software revenues, far exceeding peer companies and we continued to improve our profitability as demonstrated by additional operating margin gains."

But although the results outstripped those of its rivals, SAP still seems disatisfied, according to David Bradshaw, principal analyst at Ovum. "SAP's success is remarkable, all the more so for its uniformity across its three main markets of the US, Germany, and EMEA excluding Germany," he noted.

"In particular, in the US market SAP is currently in the middle of hiring in a big way and it also mentioned that it had felt some pressure on consulting rates and was having to take time to make its new hires reduced the margin in the services business. So it is all the more remarkable that SAP still increased its operating margin from 25 per cent in 2003 to 27 per cent in 2004.

Still, SAP seems dissatisfied with these remarkable results, constantly referring to what they would have been in constant dollars - or even if the results were reported entirely in dollars. Despite its success, is it trying
to pander to Wall Street a little too hard, we wonder?

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