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HolidayBuyer's Guide
Tech Industry

SAP jumps on fourth-quarter profits

Shares in German business management software maker SAP jump 27 percent in early trading after the firm said its preliminary fourth-quarter profits have doubled.

Shares in German business management software maker SAP jumped 27 percent in early trading today after the firm said its preliminary fourth-quarter profits have doubled.

SAP was up 11 at 55.88 in the afternoon, after setting a new high of 57 in late morning trading. Shares closed at 60, up 15.12.

For the quarter, pre-tax profits will be "significantly" higher than the same period in 1998, excluding charges of roughly 120 million euros ($123.5 million) in the quarter for the company's employee bonus program, the company said in a statement.

New software license sales reached nearly 800 million euros ($823.25 million) in the fourth quarter, an increase of about 40 percent compared with the same period a year earlier.

The company said total revenues for the quarter increased by approximately 25 percent compared with its year-ago period, citing strong new software license sales in the fourth quarter. As a result, SAP said it will achieve its fiscal 1999 revenue growth target of between 15 percent and 20 percent, announced last October.

SAP competes against rivals Oracle, Baan, PeopleSoft and JD Edwards in the market for enterprise resource planning (ERP) software, which automates a company's back-office system, or human resources, financials and manufacturing needs. The company has been banking on its mySAP.com Internet product to help it expand into other areas, such as customer relationship management software, supply chain management software, and the business-to-business e-commerce software market.

Last quarter, SAP disappointed investors with profits that fell 64 percent to $48.6 million from nearly $135 million a year ago. At the time, few analysts had expected such a steep decline.

Earlier this week, SAP rival PeopleSoft, which has also faced financial challenges recently, said it expects a significant rise in software license revenues and projects its fourth-quarter earnings will range between 2 cents and 4 cents a share, in line with analysts' expectations.

SAP said it will provide more details in its 1999 preliminary results announcement slated for Jan. 24.