SAP forecast sales growth and higher margins on Wednesday despite a volatile wider economy, but the software maker gave a conservative outlook for 2008 as it expands into new markets.The world's biggest maker of business-management software said its operating profit margin should inch up to 27.5 to 28.0 percent this year from a comparable figure of 27.3 percent in 2007, excluding acquisition-related charges.
But the company said software-related sales growth would slow this year as it integrates a $7.1 billion acquisition and steps up investments in a new proposition for smaller customers.
SAP shares rose 1.6 percent at 31.94 euros ($46.51) by midday on Wednesday, off an earlier high of 32.72 euros ($48.09) and outperforming a 0.3 percent weaker German blue-chip DAX index.
DZ Bank analyst Oliver Finger wrote in a note: "Stand-alone guidance (12 to 14 percent) seems to be conservative, but given the difficult market environment we assess this as a positive."
SAP said it expects software and software-related services revenues to grow by 12 to 14 percent this year at constant currencies--the same guidance it exceeded in 2007 with a 17 percent increase.
Including sales from recently acquired Business Objects and excluding acquisition-related revenue writedowns of about $264.6 million, these revenues should rise by 24 to 27 percent at constant currencies, SAP said.
Organic growth
Chief Executive Henning Kagermann told a news conference SAP would not pass up future acquisition opportunities if they were good enough, despite the fact that the company will be
"If the right opportunity were to present itself it would be absolutely false not to pursue it--regardless of our general strategy," said Kagermann, acknowledging that the such a large acquisition was a departure from SAP's organic growth policy.
Archrival Oracle, which is bigger overall than SAP, has bought up companies over the past few years
Oracle gave a confident outlook after last quarter's results, easing concerns a slowing U.S. economy may curb business software spending, and SAP's Kagermann told CNBC television on Wednesday he had not seen any sign of customers changing their spending behavior.
Indirectly, the weakening U.S. economy cost SAP $538 million in sales and $189.63 million in operating income in 2007 due to the decline in the U.S. dollar, SAP said.
In the fourth quarter, SAP's quarterly operating profit rose 2 percent to $1.63 billion, while net profit fell 6 percent to $1.11 billion.
Greenfield opportunity
SAP said it would invest $257 million to $330.7 million this year in its new Web-delivered software for smaller firms, Business ByDesign, after spending $183.7 million on it last year. SAP considers this area a "greenfield" opportunity.
The company believes Business ByDesign will help it compete with on-demand software pioneers such as Salesforce.com and aims to have 1,000 customers--some paying and some trialing the service--by the end of 2008, up from 150 now.
At the other, top end of the market, SAP is betting that new products it is rolling out incorporating Business Objects software will help it win business from decision-makers who need to mine masses of data to extract useful intelligence.
Business Objects separately reported a fall in fourth-quarter profit amid a rise in tax reserves on Wednesday, although revenue rose 20 percent. The results were broadly in line with market expectations.
By extending its reach into new segments, SAP aims to double its addressable market to around $75 billion by 2010. Half its orders by then should come from products not yet on the market.
©2007 CNET Networks, Inc. All rights reserved. CNET , CNET.com , and the CNET logo are registered trademarks of CNET Networks, Inc. Used by permission.
