* Sees 2014 cloud revenue at 1-1.05 bln euros
* Q2 operating profit 1.24 bln euros vs 1.26 bln expected
* Still sees 2014 operating profit of 5.8-6.0 bln euros
* SAP shares rise 3 pct, at top of sector index
(Rewrites, adds analyst comment, shares)
By Harro Ten Wolde
FRANKFURT, July 17 German business software
maker SAP raised its sales forecast for web-based
software on Thursday, saying competitors were unable to match
the security of its cloud computing systems.
Cloud computing allows businesses to cut costs by ditching
bulky servers for network-based systems using remote data
centres run by technology companies.
The company said it expected revenue from cloud
subscriptions and support of between 1 billion and 1.05 billion
euros in constant currency terms this year, up from a previous
forecast for 950 million to 1 billion euros.
Revenue from its cloud business jumped by 32 percent to 242
million euros in the second quarter, helping overall revenue
grow 2 percent to 4.2 billion euros.
Chief Executive Bill McDermott said he expected to snatch
business from pure cloud service providers such as
Salesforce.com and Workday Inc.
SAP shares were up 3.2 percent at 0800 GMT, at the top of a
European technology share index, which was up 0.7
percent. The stock has fallen 4 percent so far this year.
"Cloud growth is encouraging," said Harald Schnitzer,
analyst at DZ Bank. "SAP seems to perform better than some of
Schnitzer said he was keeping his "buy" rating on SAP. A
Frankfurt-based trader said the news should be good enough for a
relief rally in the stock.
Global business spending on cloud services is expected to
jump 20 percent this year to $174 billion, research firm IHS
estimates. By 2017, spending will be at more than $235 billion,
triple the 2011 level, they expect.
SAP's smaller German peer Software AG is also
making the transition to the cloud but has difficulties offering
a fully integrated platform the way SAP does. Earlier this week,
Software AG warned sales would disappoint, sending its shares to
their lowest in almost five years.
SAP aims to boost its annual cloud revenues to as much as
3.5 billion euros by 2017, from 787 million in 2013.
McDermott said SAP's smaller rivals faced a big challenge
because company CEOs wanted to integrate multiple cloud software
applications into one platform but those providers could not
provide enough security for that to happen.
"I think (smaller cloud players) are getting more and more
tough questions on security and encryption and that is why I
think the banks, that I personally dealt with, are thinking of
moving them out as quickly as possible," McDermott told
reporters on a conference call. "I see them in a lot of trouble
in the market."
SAP, which is competing with global rivals including IBM
and Oracle to exploit surging demand for
web-based software, reported a 4 percent rise in second-quarter
operating profit, excluding some special items, to 1.24 billion
That was slightly below the average forecast of 1.26 billion
euros in a Reuters poll.
SAP said it still saw full-year operating profit of between
5.8 billion euros and 6 billion euros, up from 5.51 billion last
Analysts polled by Reuters are broadly more pessimistic,
seeing operating profit of 5.74 billion, with individual
estimates ranging from 5.59 billion euros to 6.03 billion.
($1 = 0.7395 Euros)
(Reporting by Harro ten Wolde; editing by Maria Sheahan and Tom