Excerpt from our One Page Annotated Wall Street Journal Summary (receive it by email every morning by signing up here):
SAP's Profit Rises 43% Despite Sluggish Sales
Summary: German software maker SAP posted a 43% gain in second-quarter profit helped by continuing sales growth and an unusually low tax rate due to a previous settlement with the German tax authorities. The German software company already pre-announced weak sales growth July 13th, and yesterday announced net income of €414 million ($521.6 million), or €1.35 a share, compared with €289 million, or 93 European cents a share, in the year-earlier period. SAP last week said that group sales rose 9% to €2.2 billion from €2.02 billion. Software license sales in the second quarter rose just 8% to €621 million -- far below analysts' expectations -- amid weakness in some European and Asian-Pacific countries and as competition with rivals Oracle (NASDAQ:ORCL) and Microsoft (NASDAQ:MSFT) increases. SAP reiterated its guidance for the full-year including a rise in software revenue growth of between 15% and 17%, a pro forma operating margin increase of between half to one percentage point, and a pro forma 2006 EPS of between €5.80 and €6.
Comment on related stocks/ETFs: See the full SAP conference call transcript. William Trent compares SAP to Oracle, and it's not pretty.