SAP: U.S. the growth driver

The company's CEO also responds to IBM takeover rumors

SAP AG was able to increase sales in the U.S. for the 14th consecutive quarter of double-digit growth as the world's largest maker of business software continued to sell more products to existing customers and nibble away at the customer base of rival Oracle Corp.

In the U.S., software license revenue in the first quarter rose 25 percent to €165 million (US$204 million as of March 31, the last day in the period being reported) from €131 million in the same period a year earlier. It accounted for the lion's share of the €228 million revenue in the Americas, which was up 47 percent year over year.

Total first-quarter sales, including revenue from maintenance and service contracts that are driven by the sales of new licenses, grew 18 percent to €2.04 billion, while net income climbed 11 percent, to €282 million.

"The U.S. will continue to be our growth driver," said Léo Apotheker, SAP board member and president of customer solutions and operations, in a conference call with analysts. "There are many opportunities for us in this marketplace."

The Walldorf, Germany, company signed 40 deals in the first quarter of this year under its Safe Passage program, said Chief Executive Officer (CEO) Henning Kagermann. Safe Passage is designed to woo away customers using business software applications from PeopleSoft and J.D. Edwards, which were acquired by Oracle.

On the subject of rumors that SAP could itself be the target of a takeover bid by IBM Corp., Kagermann said he saw no reason to change the current relationship of close cooperation between the two firms.

Software revenue in the EMEA (European, Middle East and Africa) region increased 7 percent to €229 million from €215 million, with revenue in Germany up 8 percent year over year.

Revenue in the Asia-Pacific region increased 12 percent to €73 million from €65 million, despite an 18 percent drop in Japan.

SAP reiterated its aim to increase software license revenue by 15 percent to 17 percent this year.

Kagermann described 2006 as a "cornerstone year" in which new products will be the foundation for growth

Later this year, the company plans to offer mySAP All-in-One on the company's new business process platform, which is based on a services-oriented architecture, Kagermann said.

All-in-One, a trimmed-down version of its mySAP Business Suite targeting midsize businesses, will be the first product available on the new platform into which the company's NetWeaver integration software will evolve.

Plans to form a workers' council in the company have "nothing to do with getting a union," Kagermann said. "I expect we'll have a high percentage of people in the council who will want to preserve the SAP culture."

Last month, SAP agreed to allow a workers' council after three employees, also members of the IG Metall union, threatened to take the company to court over the issue.

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