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SAP's cautious optimism

SAP's cautious optimism

SAP Chief Executive Officer (CEO) Henning Kagermann is cautious but optimistic about the company's medium-term growth after the software maker on Thursday reported another strong sales performance in the third quarter.

"Our figures exceeded expectations," Kagermann said in a conference call. "We outperformed the market and gained 1 percent market share."

Kagermann added that the company's SafePassage program, designed to lure customers away from rival Oracle Corp., now has more than 400 customers.

But nine months into the 2006 business year, Kagermann said the company, while within its guidance figures, is at the lower end and is "less likely" to edge up by year's end.

At the start of the year, SAP forecasted 2006 software license revenue to increase between 15 percent and 17 percent.

Although Kagermann declined to provide guidance figures for 2007, he said he doesn't see any changes in the market that could slow down demand.

"Pricing remains tough but stable," he said. "We don't expect any changes -- for better or worse."

Kagermann acknowledged Salesforce.com Inc. as a competitor with its on-demand applications but said SAP has countered with new on-demand offerings.

On Thursday, SAP reported a 17 percent increase in third-quarter software license revenue, an important gauge of future fees from consulting and maintenance, to €691 million (US$877 million as of Sept. 30, the last day in the period being reported) from €590 million in the same period a year earlier.

Total revenue in the third quarter increased 11 percent to €2.2 billion from €2.0 billion.


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