SAP Won't Rule Out More Acquisitions

Even as it works to wrap up its $6.8 billion buyout of business intelligence software vendor Business Objects, SAP will consider making additional acquisitions that match the company's long-term strategy, SAP CEO Henning Kagermann said Thursday. Kagermann's comments came during a press conference to discuss the company's third-quarter earnings.

SAP has identified its business process platform, on-demand E-business applications and applications that apply directly to business users as its three growth drivers, Kagermann said. While SAP's own products cover the first two areas, Kagermann said the Business Objects acquisition and its purchase earlier this year of performance management application vendor OutlookSoft would fuel growth in the business user area.

"Organic growth remains our primary driver for growing our business. But whenever we see a strategic opportunity that meets our growth targets, we will not exclude acquisitions of the size of Business Objects," Kagermann said.

Prior to this year SAP traditionally shied away from making big acquisitions, choosing to grow its business through its own application development. That's in sharp contrast to Oracle, SAP's main rival in the application arena, which has acquired more than 30 companies in the last three years, including PeopleSoft and Siebel Systems.

For its third quarter ended Sept. 30, SAP reported revenue of 2.42 billion Euros (approximately $3.46 billion), up 9 percent from the same period one year earlier. Net income was 408 million Euros ($583 million), a 10 percent year-over-year increase.

SAP reported that software and software-related service revenue for the quarter was 1.74 billion Euros ($2.49 billion) while software revenue was 715 million Euros ($1.02 billion), representing year-over-year gains of 13 percent and 11 percent, respectively.

By its own calculations, SAP said its share of the $35.9 billion worldwide core enterprise applications market increased to 27.0 percent for the four-quarter period ended Sept. 30, up from 23.5 percent for the four-quarter period ended Sept. 30, 2006.

SAP also said it expects to report growth of 12 to 14 percent in software and software-related service revenue for all of 2007.