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Marketing boosts SAP revenues

Leading enterprise software maker SAP says third-quarter revenues jumped 82 percent, driven in part by favorable foreign currency exchange rates.

SAP's strong third quarter results show the impact of good marketing initiatives for a reliable product, said CFO and COO of SAP America Kevin McKay,

The leading enterprise software maker today said third-quarter revenues jumped 82 percent compared to last year's results, driven in part by favorable foreign currency exchange rates, successful marketing, and R&D initiatives, the company said.

The German company reported pre-tax profits of $472 million, a rise of 86 percent over last year. Company shares soared more than 4 percent for the quarter ending September 30, beating analyst expectations.

"SAP focused on the middle market to change the perception that we were only a global market player? and, despite what our competition says, that our product didn't mean a complicated implementation for customers," said McKay. "We needed to prove that that wasn't the case."

McKay said the company did so with a string of initiatives over the past nine months that targeted these perceptions and opened new markets.

Examples of the company's desire to change the perception of its product include Accelerated SAP, a rapid implementation program for the company's core product R/3, and Team SAP, which includes more than 2,800 consultants and 15,000 partner consultants for supporting R/3 customers, he said.

"Collectively these initiatives brought a high level assurance for implementing R/3 systems," he said.

In addition, SAP announced the start-up of a new subsidiary SAP America Public Sector in August. The start-up will provide planning, administrative, and information management systems for government, education, and nonprofit organizations in the United States, based on the R/3 multifunction business application package.

Later the same month, Sap launched Pandesic, the joint e-commerce venture of Intel (INTC) and SAP, intended to package SAP business application software with Intel-based PC hardware. That package will enable almost any company, whether fledgling or Fortune 500, to do business over the Internet.

Analysts say the company's third quarter results are significant. "It's impressive because the third quarter is usually down for them," said Andrew Roskill, a senior analyst for Smith Barney. "They have successfully grown their marketing and implementation support services."

Strong demand for its business software and foreign sales boosted by the weak deutsche mark continued to fuel sales growth, said the company.

The sales growth of the first nine months of the year was matched by an almost equal rise in costs, as SAP continued to expand development initiatives, infrastructure, sales, and marketing in traditional markets as well as new ones, according to the company.

Almost a year ago, SAP saw one of the darkest days in its 25-year history. A slowdown in growth during the third quarter of 1996 sparked a massive sell-off in the company's shares and led to an insider trading probe. But since then, SAP has rebounded with a string of big quarters boosted by the buoyant dollar and an undiminished demand for its corporate management software.

"They had a hiccup last year? Basically this (Q3) was a real solid quarter," Roskill.

Reuters contributed to this story.