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Software AG Reports Strong Profit, License Sales

Germany's second-biggest software maker, Software AG , reported a 62 percent rise in licence sales on Friday, beating analyst expectations.

Sales of new software licences, a key figure that signals future maintenance revenues, were 57.8 million euros ($82.67 million) in the quarter to September, the company said.

Earnings before interest and tax (EBIT) rose 27 percent to 32.4 million euros on a 48 percent increase in sales to 157.8 million euros.

A Reuters survey of 15 analysts had on average forecast licence sales of 57.3 million euros and EBIT of 31.7 million.

In 2008, Software AG expects to increase net revenue by 22-25 percent and raise its operating margin to about 23 percent.

It confirmed its outlook for this year, which it raised after completing the purchase of U.S. peer webMethods for $546 million in June. Software AG expects sales at current currency exchange rates to grow by up to 35 percent this year, compared with a previous forecast of 14 percent.

Its cash-cow product manages large databases on mainframe computers, while its faster growing Crossvision product knits together the patchwork of different software products that many large organisations have acquired over years.

Software AG is valued at around 15 times estimated 2008 earnings compared with a sector average of 17, according to Reuters Estimates.