SAP reports strong sales in Q2

Overall result affected by Business Objects buy

SAP has reported strong second quarter revenue as sales of software and software-related services expanded, but the company's net profit declined due to charges related to its acquisition of Business Objects.

SAP reported a net profit of €408 million (NZ$865 million) for the second quarter, down 9% from the same time last year. However, sales increased 18% year-on-year to €2.86 billion.

Software and software-related service revenues in the Americas were €662 million, up 17%; in Europe, the Middle East and Africa, €1,111 billion, a rise of 21%overall; and €288 million in Asia-Pacific, up 30% from last year.

The Asia-Pacific numbers were affected by a 9% growth rate in Japan, compared to 43% for other regions. When announcing the results, SAP executives attributed the weakness in Japan to "operational issues" that have now been resolved. "We hope we can consider Q2 just a glitch," said co-CEO Leo Apotheker.

The executives had little new to say about the status of Business ByDesign, its on-demand offering for the midmarket. The company recently said it was scaling back rollout plans for the product, to ensure it can deliver something high in both quality and profitability.

They didn't address SAP's legal battle with Oracle, but did briefly touch upon the company's contorversial plans to move all customers to enterprise-level support. The move will result in higher costs for current standard support customers over time, and has resulted in some negative feedback from user groups.

It should not be viewed as a price hike per se, Apotheker argued. "We have created a whole new service," he said. "You can't qualify this as a price increase."

SAP has said increased complexity in its customers' IT environments was another rationale for the shift, and that the higher-level service could actually decrease software ownership costs by adding efficiencies.

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