SAP, Europe's biggest software company, offered the battered tech sector a glimmer of hope on Thursday by announcing a 78% jump in net profit for the second quarter.

The German company reported earnings of 206m euros (£126.8m, $179m) in the period ending 30 June, up from 116m euros a year earlier, with sales rising 24% to 1.85bn euros.

The figures were much better than expected and SAP shares shot up about 10% at the start of trade in Frankfurt.

SAP's outlook was also much more optimistic than those from its main US rivals, i2 Technologies and Siebel Systems.

They painted a gloomy picture for the rest of the year on Wednesday, saying conditions were getting tougher.

Re-inventing e-business

SAP has been the exception in the depressed European tech landscape and its shares have risen 33% since January.

Over the past two years, SAP has remodelled itself to become Europe's leading web-based business-to-business software company through its mySAP.com site.

It has switched focus from supplying software run within big corporations to an internet-based strategy built around desktop portals.

Optimistic forecast

SAP's underlying profits also grew strongly, with earnings before interest, tax depreciation and amortisation (EBITDA) soaring 118% to 450m euros and operating profit up 72% at 424m euros.

The company reiterated its forecast of a 20% increase in sales for the first nine months.

Boosted by the positive second quarter results, it gave a full-year forecast for the first time, predicting a 20% increase in sales for the whole of 2001.

Analysts had forecast a second quarter net profit in a range of 117m and 221.7mn euros and of sales between 1.7bn and 1.87bn euros according to a Reuters poll.