Positive News From SAP Boosts Tech SectorPositive News From SAP Boosts Tech Sector

SAP splashed a bit of sunshine on the gloomy technology sector Thursday, reporting that fourth-quarter license sales will exceed market expectations.

As an indication of the software market's weakness, analysts and investors welcomed SAP's news, even though sales were down from a year ago. Europe's largest software maker says fourth-quarter 2002 license sales were about $996.8 million, down 8% from $1.1 billion a year ago. Analysts polled by Dow Jones Newswires expected license sales of $848.7 million. License sales are a key indicator of demand for software companies, which also earn money through consulting, maintenance, and training.

SAP wasn't the only high-tech company to generate smiles among investors. Foundry Networks Inc. says it expects better profits in the fourth quarter compared with the third quarter on revenue ranging from $84 million to $87 million.

SAP also says it expects 2002 revenue to be slightly more than 2001's $7.7 billion. Analysts had expected a decline. In addition, operating profit margin, before stock-based compensation and acquisition costs, would be at least 1% higher than the 20% of 2001.

The SAP news boosted the shares of the largest U.S. software makers, with Microsoft's stock rising 2.9%, to $55.81, and Oracle more than 7%, to $13.01.

Analysts have said that positive news coming out of the technology sector may be an indication that capital spending is improving. This is important for the state of the overall economy. Consumer spending, which has buoyed the U.S. economy, is weakening, so more sales to businesses are needed to sustain growth.