UPDATE 3-SAP software sales top forecast as wins market share

Wed Oct 24, 2012 6:22am EDT

* Software sales 1.03 bln euros vs 995 mln expected

* Sees year software, services revenue up 10.5-12.5 pct

* Previous forecast was for 10-12 pct growth

* Shares up 4.3 percent (Rewrites, adds detail, updates shares)

By Harro Ten Wolde

MUNICH, Oct 24 (Reuters) - German software group SAP sold more software licenses than expected in the third quarter as new products helped it to snatch market share from rivals in a tough economic backdrop.

The world's biggest maker of business software also nudged up its full-year revenue forecast on Wednesday to reflect its $4.3 billion acquisition of cloud-computing company Ariba.

It said full-year revenue from software and related services would rise 10.5-12.5 percent, up from a 10-12 percent projection made in July.

"Assuming that the macroeconomic environment does not deteriorate we expect to reach the upper end of the range," SAP's co-chief executive Jim Hagemann Snabe told reporters.

Shares in SAP, whose clients include Apple, GE , McDonald's and Pepsi, were up 4.3 percent to 55.12 euros at 1020 GMT.

SAP said it continued to win market share from competitors, a trend which was illustrated by a 17 percent jump in new software license sales to 1.03 billion euros ($1.3 billion), more than analysts' average expectation of 995 million euros.

Investors pay close attention to new software sales because they generate high-margin, long-term maintenance contracts and are an important gauge of the company's future profits.

Sales were boosted by new products such as Hana, which helps companies to analyse large quantities of data quickly.  SAP's third-quarter operating profit before special items rose 10 percent to 1.24 billion euros, while software and software-related services revenue rose 19 percent to 3.19 billion. Both figures were in line with market expectations.

"A sound set of figures, given the macroeconomic uncertainties and the rather poor results of some competitors," DZ Bank analyst Oliver Finger said, reiterating his "buy" recommendation on the shares.

Rivals such as IBM and Microsoft said earlier this month businesses and governments were holding back spending on information technology amid economic uncertainty in Europe and ahead of U.S. elections next month.

HEDGING LOSS

SAP, which also competes with Oracle, still expects 2012 operating profit to rise to 5.05-5.25 billion euros at constant currencies.

DZ Bank's Finger said that should boost investor confidence.

SAP shares trade at 15 times estimated 12-month forward earnings, compared with a multiple of 11 for Oracle and 10 and 11 respectively for French peers Cap Gemini and Atos .

Quarterly net profit of 618 million euros was hit by a 64 million euro foreign exchange provision related to the Ariba acquisition, missing all forecasts in a Reuters poll.

"At the time when we announced the Ariba acquisition we thought it was prudent to hedge our position for a weaker euro, however the euro strengthened," finance chief Werner Brandt said.

SAP shares are up more than 30 percent so far this year, outperforming the STOXX Europe 600 Technology index, which is up 9 percent.

($1 = 0.7714 euro) (Editing by Maria Sheahan and Mark Potter)