January 27, 1998 10:15 AM PST

SAP forecasts strong earnings

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SAP today released preliminary financial results for 1997 showing that its lead in the high-end corporate computing applications market strengthened last year.

The German software maker said its sales grew by 62 percent last year, to $3.6 billion, while its earnings-per-share rose to $4.94.

The company's executive board forecasts sales growth of between 30 percent and 35 percent in fiscal 1998, and said it expects to be listed on the New York Stock Exchange by its third quarter.

SAP executives cited an underlying demand for corporate-wide packaged application software as the main factor behind the company's fourth-quarter revenues increase of 63 percent, to $1.2 billion. They also pointed to European monetary union and Year 2000 issues as further driving sales--despite predictions by Wall Street analysts that the first effects of a Year 2000-related revenue slowdown are just now being felt. Analysts predicted further that millennium bug problems will only worsen in 1998, as software customers ease up on purchases to concentrate their resources on internal Year 2000 compliance projects.

Sales of SAP's flagship R/3 system in the quarter climbed 63 percent, to $2.15 billion, while total product revenues grew by 56 percent, or $2.28 billion. The company cited the strength of the U.S. dollar and other key currencies relative to the German deutsche mark as having a positive effect on its results.

Today's preliminary results come on the heels of SAP reports that its shares climbed sharply last week, boosted by an upbeat report about its R/3 software. The company said the shares also had been lifted by buying ahead of today's announcement. Earlier this month the company said that sales rose about 60 percent and that earnings per share were up more than 50 percent.

SAP will post its final results on March 25.

Reuters contributed to this report


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