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SAP Profits Disappoint; SaaS Apps Coming Soon

It was a mixed bag for SAP in its second quarter. The business applications leader managed to grow its total software sales by 16 percent versus the year-ago quarter, but unfavorable currency exchange rates and severance pay for a pair of ousted execs eroded the bottom line.

As eCRM Guide reports, SAP did manage to carve out a healthy profit in the quarter, it just wasn't as large as analysts following the stock had hoped.

On the bright side, company officials said its oft-delayed SaaS offering, Business ByDesign, will finally be ready for primetime later this week.

SAP Co-CEO Jim Hagemann Snabe told analysts that SAP has "pipeline" of "thousands of customers" awaiting Business ByDesign and that this new version will have all the functionality customers need to run their entire business from on-demand applications.

Also, SAP also said that it has officially closed its $5.8 billion acquisition of database software developer Sybase, a purchase that it says will increase software and software-related service sales between 9 percent and 11 percent for the remainder of 2010.

German software maker SAP (NYSE: SAP) narrowly missed analysts' estimates in its second quarter, posting a profit of 491 million euros ($638 million), or 41 cents a share, on sales of 2.89 billion euros ($3.5 billion).

A survey of analysts by Thomson Reuters pegged the CRM and supply chain applications giant for a profit of 525 million euros in the quarter. In the year-ago quarter, SAP posted a profit of 426 million euros, or 36 cents a share.

The fortunes of SAP and other major enterprise software companies are closely watched by many in the industry, as both corporate technology buyers and vendors seek indications of whether IT budgets are again on the rise and new projects are taking shape.

For them, SAP may have some good news. During the quarter, software and software services revenue increased 16 percent from the year-ago quarter, rising to 2.26 billion euros from 1.95 billion euros. Total software sales increased 17 percent to 637 million euros from 543 million euros in the second quarter of 2009.

Read the full story at eCRM Guide:
SAP Stumbles on 2Q Profits, Vows SaaS Soon