Software AG's Q3 net income up 23 percent

FRANKFURT - Germany's Software AG said Thursday its net income rose 23 percent in the third quarter as revenue grew strongly because of contributions from recently acquired software maker IDS Scheer AG.

Software AG, based in Darmstadt, said net income for the July-September period rose to euro38 million ($56 million) from euro31 million in the third quarter of 2008.

Revenue for the period increased 19 percent to euro214 million from euro180 million.

Software AG, one of Germany's largest software companies, said it expects a higher profit margin and revenue for the full year.

The company makes products for banks, governments, health care and educational groups. It also sells service, maintenance and consulting services.

It said it continued to increase its efficiency and profitability, and that large and strategic customer deals and opportunities raised by the acquisition gave it grounds for optimism.

"After the first nine months of the year, we expect full-year revenue in the range of euro835 million to euro845 million," Chief Financial Officer Arnd Zinnhardt told The Associated Press after the results were released.

He said about euro40 million in revenue in the third quartercame from IDS Scheer.

Zinnhardt said the company would work to integrate Scheer over the next year and would consider making future acquisitions in 2011 or 2012, but did not talk specifically about what sort of deals it was considering.

"We want to do the current integration right; we want to see how the combined Scheer and Software AG products do together," he said.

Zinnhardt said the company's sales in Japan, its biggest market in Asia, were somewhat below expectations during the quarter, but that Australia was doing well.

He said the business in Brazil, which Software AG entered last year, was showing strong growth.

"We were very successful and we're confident that we'll see euro50 million in revenue there for 2009," he said.

Meanwhile in the U.S., the company saw "some issues" with its consulting business, but Zinnhardt said he expects business to pick up.

Software said product revenue, including licenses and maintenance increased 4 percent to euro143 million during the third quarter. Consulting revenue increased 66 percent to euro70 million.

The ETS business, which focuses on software for mainframe computers, and the Web Methods business, used for business software, saw sales decline 2 percent and 4 percent respectively.

Shares of Software AG were nearly 5 percent higher at euro65.09 in Frankfurt afternoon trading.

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