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SAP grows third-quarter profits, U.S sales

The German software maker reports a 25 percent rise in third-quarter profits and a spike in U.S sales, citing market upheaval caused by recent mergers as a business advantage.

German software maker SAP reported on Thursday a 25 percent rise in third-quarter profits and a spike in U.S sales, citing market upheaval caused by recent mergers as a business advantage.

SAP's net income for the quarter ended Sept. 30 rose 25 percent over the same quarter last year to $294 million (252 million euros), or 81 cents per share. Total revenue slipped 3 percent, to $1.92 billion, while software revenue remained nearly unchanged at $504 million.

Software revenue in the United States shot up 35 percent in the third quarter compared with the year-ago quarter, the company said. Many of SAP's toughest rivals are U.S.-based companies Oracle, PeopleSoft and Siebel Systems.

"Our success was the result of excellent sales execution, particularly in the U.S., combined with a continued focus on improving operating efficiencies," CEO Henning Kagermann said in a statement.

Customer uncertainty over PeopleSoft's $1.8 billion acquisition of J.D. Edwards is driving some business to SAP, the company said. "We are beginning to see some wins over the course of the quarter based on the merger climate, and (J.D. Edwards customer) Medtronic was cited as one of those wins," SAP spokesman Jim Dever said.

A PeopleSoft representative countered that J.D. Edwards customers have been very receptive to the merger and have shown little concern. "We don't see any uncertainty there," PeopleSoft spokesman Steve Swasey said. To underline his point, Swasey pointed to PeopleSoft's move recently to raise earnings projections for the third quarter, the first time the company reports combined earnings since the close of the merger.

Medtronic representatives were not immediately available for comment.

SAP, which makes business management applications, said it expects its full-year operating margin to increase by 2 percent compared with 2002, instead of the 1 percent to 1.5 percent increase expected earlier.