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SAP Surprises with Good Licence Sales in All Regions

SAP posted an 18% rise in software licence sales for the second quarter, surprising the market after arch-rival Oracle reported a slowdown in the Americas and Asia-Pacific.

Licence sales, crucial to hooking future maintenance and service revenues, rose to 715 million euros ($986 million), beating an average forecast of 674 million euros in a Reuters poll. SAP said it had won market share from Oracle and others.

Shares in SAP, the world's biggest maker of business software applications, rose more than 4%shortly after the open in Frankfurt on Thursday.

SAP said licence sales grew by a double-digit percentage in all regions.

"The numbers are very good. The company had a radical acceleration in growth," Cheuvreux analyst Bernd Laux said. "Market share and sales were particularly pleasing."

SAP said its share of the global market for core enterprise applications, in which it competes against the likes of Oracle and Microsoft, grew to 26.0 percent by the end of the second quarter from 25.1% at the end of March.

Operating profit also beat expectations with a 10% rise to 577 million euros. SAP spent only 50 million euros in the first half of 2007 of a planned 300 million to 400 million-euro investment over two years in new software for smaller companies.

The company made no mention in its earnings statement of any provision it may have made for fighting or settling a court case brought against it by Oracle. SAP has admitted some wrongdoing in the case, in which it is accused of stealing Oracle software.

SAP stuck to its full-year forecast to increase software and software-related service revenues by 12% to 14% at constant currencies, despite a 19% currency-adjusted rise to 1.707 billion euros in the second quarter.

It also repeated its 2007 operating margin was expected to fall to between 26% and 27% percent from 27.3% in 2006. In the second quarter, SAP's operating margin was 22%.

Sales of new licences for SAP's software, which helps mainly larger companies manage functions from supply chain management to human resources, grew 10% in the Americas, 22% in Europe and 27% in Asia-Pacific and Japan.

Adjusted for the effects of the dollar's fall to near-record lows against the euro, software licence sales grew 21% overall.

Total sales grew 10% to 2.42 billion euros, broadly in line with expectations, and net profit increased by 8% to 449 million euros, helped by a lower-than-expected tax rate.

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