SAP AG says it has strengthened its dominant position in the enterprise software market and it expects to comfortably top its previous forecast of 12% to 14% software revenue growth for 2005, with a final figure that will show an 18% increase to 2.78bn euros ($3.36bn).
The Walldorf, Germany-based company also said it has dramatically increased market share at the expense of its rivals, which it defines as the business applications of Microsoft, Oracle, and Siebel, by eight percentage points in 2005 to 63% on a rolling four-quarter basis. It said it increased its market share by three percentage points in the final quarter alone.
A sparkling performance had been expected from the company and its shares fell 3.07% to $47.32 on the New York stock exchange on disappointment that its figures were not even better.
SAP said preliminary figures show that the 18% rise in software revenue, 15% on a constant currencies basis, will bring total revenue for the full-year to 8.5bn ($10.3bn), an increase of 13%, or 12% at constant currencies basis.
With Oracle still digesting PeopleSoft and preparing for the integration of Siebel Systems Inc, SAP said the US was its most successful region where software revenues in the fourth quarter are expected to increase by 35%, 21% at constant currencies, to 315m euros ($380.2m). The whole Americas region, which includes the US, Canada, and Latin America, is expected to report software revenues up 33% in the fourth quarter, 18% at constant currencies, at 424m euros ($511.5m).
In the more sluggish EMEA region, software revenues are expected to increase 8%, 7% at constant currencies, to 625m euros ($754m). The economic difficulties of its German home market led software revenue there to increase only 2% in the quarter to 238m euros ($287.4m).
SAP found conditions in the Asia/Pacific much more buoyant, with fourth-quarter software revenue up 25%, 18% at constant currencies, at 131m euros ($158.2m). SAP is hardly scratching the surface of the enterprise software market in Japan with fourth-quarter software revenue only expected to increase 9% to 49m euros ($59.1m). On the basis of these figures, SAP expects its expects its earnings per share for the year, before exceptional items, to be at the high end of the range of its previously published target of 4.85 euros to 4.95 euros ($5.85 to $5.97).
SAP also announced that it is to merge its North America and Latin America business units into one organization, SAP Americas, led by Bill McDermott, previously head of the North America business. SAP director Leo Apotheker said its North America business is one of the growth engines for SAP and combining these regions will enable it to maximize its resources. SAP said it has made one of McDermott’s top priorities to expand sales in the US public sector.