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SAP to hit reduced sales targets

Though the German business software maker says it's on track to meet 2002 sales goals, the picture isn't as bright for license revenue.

Alorie Gilbert Staff Writer, CNET News.com
Alorie Gilbert
writes about software, spy chips and the high-tech workplace.
Alorie Gilbert
2 min read
Business software maker SAP said Thursday that 2002 sales are on target to meet analyst projections, but fourth-quarter license revenue declined.

The German company said 2002 revenue "slightly" exceeded the 7.34 billion euros ($7.7 billion U.S.) reported in 2001. Analysts polled by First Call expect SAP to hit $7.8 billion in sales and to post earnings of 67 cents per share for last year.

SAP retracted its goal of 5 percent to 10 percent revenue growth in 2002 last fall, citing uncertain economic and political conditions.

The software maker expects to book about 950 million euros ($996.5 million U.S.) in license revenue for the quarter ended Dec. 31, some 9 percent less than the 1.03 billion euros ($1.08 billion U.S.) it reported for the fourth quarter of 2001.

As the core business of most software companies, license revenue is considered an important indication of how a software maker is doing. Software companies also make money off consulting, maintenance and training.

Analysts polled by First Call expect SAP to report $2.3 billion in total fourth-quarter sales and to post earnings of 29 cents per share for the quarter. SAP did not discuss total fourth-quarter sales Thursday.

SAP, which is among the largest software companies in the world, said it achieved its goal of improving operating profit by at least 1 percent, before stock-based compensation and acquisition costs, from 20 percent in 2001.

Demand is on the wane for business management applications made by SAP, Oracle, PeopleSoft, and others. Last month, Oracle reported that license revenue from business applications fell 34 percent year over year in its second quarter, which ended Nov. 30.

American companies have been particularly frugal. Fighting declining sales in its Americas division, SAP said Wednesday that it's letting go 132 employees in it U.S. sales force in a reorganization of that group. SAP, based in Walldorf, Germany, employs about 3,500 people in the United States.

SAP's relatively steady fourth-quarter results buoyed investor sentiment Thursday. Shares were trading at $24.15, up more than 9 percent from Tuesday's closing price of $22.49.

SAP plans to report further details on the quarter and the year on Jan. 30.