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SAP Confident About 2007 After Robust Third Quarter

SAP said it should reach the top of its full-year sales guidance range after a solid third quarter in which it met market expectations, and forecast demand for its software would stay strong into 2008.

The world's biggest maker of business software said on Thursday third-quarter software sales rose 11 percent or 15 percent at constant currencies to 715 million euros ($1.01 billion), despite a slowdown in the United States.

In Europe, where SAP earns most of its revenue, software sales rose 14 percent.

In the United States, software sales rose just 3 percent, or 11 percent at constant currencies. SAP won deals with Wal-Mart and Apple in the quarter.

Chief Executive Henning Kagermann sees sales growth continuing at the same pace next year as demand for software that helps automate and manage areas from customer relations to supply chains remains strong, he said in TV interviews.

SAP shares, which were dented by a surprise decision to buy data mining group Business Objects for 4.8 billion euros earlier this month, were down 0.68 percent in Frankfurt against a 0.26 percent rise for the DAX.

"The company continues to execute very well and we now have the clarity on the second half that we were looking for," said Dresdner Kleinwort analyst Adam Shepherd.

Analyst Heino Ruland of consultancy FrankfurtFinanz said: "The icing on the cake is the Wal-Mart deal."

Strong Third-Quarter Earnings

SAP said third-quarter operating income rose 9 percent to 601 million euros, beating the average forecast in a Reuters poll of 28 analysts, and the company reiterated its 2007 operating profitability target of 26-27 percent.

SAP said it had spent 85 million euros in the first nine months of the year of the 300-400 million it plans to invest over two years in new Web-hosted software for small companies as it races to double its customer base to 100,000 by 2010.

"We look forward to the remainder of the year, as we continue to invest in our business for future growth," Kagermann said in a statement.

SAP, which is fighting a court case brought by arch-rival Oracle , said it had gained a percentage point of market share during the quarter and now had 27 percent of the $35.9 billion global core enterprise applications market.

Oracle reported a 25-percent rise in quarterly profit last month but forecast slower growth in sales of new software in the current quarter.

SAP trades at 21 times next year's forecast earnings, according to Reuters Estimates, more expensive than Oracle at 16 times 2008/09 earnings.

SAP will hold a conference call for analysts at 1 pm London time and a call for journalists at 2 pm London time.