SAP Q2 Results Show Slip in Profit

BERLIN (07/20/2000) - Enterprise software company SAP AG released results Thursday for the second quarter, ending June 30. Net profit for the quarter, at 172 million euros (US$159 million), was down 28 percent from the figure of 240 million euros posted for same quarter last year. Revenue was up 15 percent for the quarter, at 2.7 billion euros from 2.3 billion euros last year.

Earnings per share were at 0.54 euros, down from 0.76 euros for the same period last year.

Executives put a positive spin on the news, saying that heavy investment in the company's MySAP.com Internet applications is paying off.

"Profitability will improve over time, and the key driver for our business still is software," said co-chief executive officer Hasso Plattner on a conference call from New York. "We are still on our way of our older prediction that we want to double the revenues within three years, so it's challenging, but it's also still achievable."

Plattner added that MySAP.com will soon account for the lion's share of SAP's software sales. In the fourth quarter of 1999, 16 percent of revenue came from MySAP.com licenses, he said; in the first quarter of 2000, that was up to 22 percent, and in the second quarter, to 47 percent. "So our prediction that half of our revenue stream in 2000 will come from MySAP.com, and then 80 percent next year, we're right on track," said Platter. Over half of MySAP.com sales were to new customers, he added.

"The numbers came in extremely close to our expectations," said software analyst Peter Wyatt of Nomura International PLC in London. "This is a major year of transition for SAP ... what we've got looking forward now is it looks like MySAP.com is going to be a credible product, and in that case, if you do have credible sales in 2001 and 2002, I think you can hope to see a significant margin expansion in that period as well."

SAP, in Walldorf, Germany, can be reached at +49-6227-747474 or at http://www.sap.com/.

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