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SAP's profit drops by 40%

Business software maker SAP reported a 40% drop in net profit for its first quarter as licence revenue fell and losses at US...

Business software maker SAP reported a 40% drop in net profit for its first quarter as licence revenue fell and losses at US partner Commerce One increased.

Net profit for the quarter fell to €65m (£40m)), or €0.21 a share. That compares with a €109m, or €0.35 a share profit a year earlier, SAP said.

Overall revenue grew by 9% from last year to €1.66bn (£1.02), despite a 12% drop in revenue from licence sales to €402m (£247m), SAP said. Product sales, which include licence revenue and software maintenance revenue, were up 6% at €999m (£615m), consulting revenue increased 18% to €539m (£332m) and training revenue was up 1% at €110m.

Commerce One's losses took €52m (£32m) off SAP's earnings, 550% more than the €8m last year, SAP said. Excluding the Commerce One effect and costs related to the takeover of US portals company TopTier Software, SAP said its net income came in at €121m (£74m), up from €117m. SAP owns 20% of Commerce One.

SAP sees Europe a relatively strong market. Revenue for the Europe, Middle East and Africa region was up 11%, reaching €886m (£545m). Revenue in the Asia Pacific region climbed 4% to €185m (£114m).

In the Americas, the most challenging market with businesses taking a deliberate and measured approach to software investments, revenue increased 7% to €587m (£261m) according to SAP.

Conditions for software vendors remain challenging, SAP said. However, the company expects a strong second half and said it will meet its 15% full-year sales growth target. SAP also expects its operating margin excluding stock-based compensation and TopTier related charges to increase by 1%.

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