UPDATE 3-SAP posts double-digit Q1 growth, keeps outlook

* Q1 EBIT 557 million euros vs poll avg 615 million euros

* Total sales 2.5 billion euros vs poll avg 2.4 billion

* Strong pipeline for Q2, upcoming quarters

* Sees sustainable growth, recession coming to end

* Shares down 1.5 pct in weak German market

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(Adds comments from co-CEO, analyst, updates shares)

By Nicola Leske

FRANKFURT, April 28 (BestGrowthStock) – Germany’s SAP AG (SAPG.DE: )
posted double-digit growth in first-quarter sales and operating
profit, underscoring a rebound in corporate technology spending
seen across the industry.

“We see the recession coming to an end and do believe there
is sustainable growth,” Co-Chief Executive Jim Hagemann Snabe
told Reuters Insider in an interview on Wednesday.

He added he expects SAP to achieve double-digit growth in
most regions, especially Asia.
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For Reuters Insider TV please double click on [ID:nRTV95627]
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Snabe and Bill McDermott took the reins at the company based
in Walldorf in western Germany after a surprise management
reshuffle in February in which Leo Apotheker quit after just
seven months as sole CEO and the company returned to a split
leadership structure. [ID:nLDE6170XB]

McDermott said that the company had a strong pipeline of
project requests for the second quarter and beyond, an indicator
that the recovery in IT spending continued to filter through to
SAP’s business. [ID:nWEA8721]

SAP, whose more than 92,000 customers include companies such
as McDonald’s (MCD.N: ), Pepsi (PEP.N: ), Audi (NSUG.DE: ), Apple
(AAPL.O: ) and GE (GE.N: ) as well as institutions such as Johns
Hopkins Hospital, bills itself as the world’s leading provider
of software to help companies manage supply chains and customer
relations.

It competes with U.S. software companies Oracle (ORCL.O: ),
IBM (IBM.N: ) and Microsoft (MSFT.O: ), which also reported strong
results on the back of improved demand.

“We become increasingly optimistic that SAP is finally
getting back to its growth path,” BHF Bank analyst Jochen
Klusmann wrote, upgrading the stock to “buy” from “reduce”.

He added that Business ByDesign, SAP’s software for small
and medium-sized companies whose launch was delayed several
times, would be an additional growth driver.

Snabe confirmed in a conference call that a broad rollout of
the product was still planned for the middle of the year.

SOLID QUARTER

By 1207 GMT shares in SAP were down 1.5 percent in a lower
DAX (.GDAXI: ) that had only four gainers.

SAP said earnings before interest and tax (EBIT) in the
first three months of the year rose a less-than-expected 47
percent to 557 million euros ($741.9 million) on an 11 percent
increase in sales of software and software-related services to
1.9 billion euros.

Total sales were up 3 percent at 2.5 billion euros.
Analysts polled by Reuters had forecast on average a 50
percent rise in operating profit to 615 million euros on total
sales of 2.4 billion.

Sales from software and software related services were seen
by analysts at 1.86 billion euros.

SAP, which switched to IFRS reporting from US-GAAP,
reiterated it expected 2010 non-IFRS software and
software-related service revenue to increase by between 4 and 8
percent at constant currencies after a 5 percent decline last
year.

It aims to reach a full-year 2010 non-IFRS operating margin
in a range of 30 to 31 percent at constant currencies, up from
27.4 percent in 2009.

“SAP showed a solid quarter in terms of revenues and
licences,” Oliver Finger, analyst at DZ Bank, said. “We see an
increasing momentum in terms of licence development, which makes
us confident that demand is picking up. Maintenance revenues
were also strong.”

SAP trades on a 12-month forward price/earnings ratio of
17.4 times, a premium to Oracle’s 14 and Microsoft’s 13.7,
according to Thomson Reuters StarMine, which weights estimates
by analysts’ previous accuracy.

Stock Market Report

(Additional reporting by Christoph Steitz; Editing by David
Holmes and Louise Heavens)
($1=.7508 Euro)

UPDATE 3-SAP posts double-digit Q1 growth, keeps outlook