TechnologySAP profits hit by Oracle litigation

SAP profits hit by Oracle litigation

Profits at financial software company SAP were damaged by restructuring costs and a recent court battle with rival Oracle

FINANCIAL SOFTWARE COMPANY SAP saw it profits after tax fall, after losing a legal battle with rival Oracle.

The company’s fourth quarter figures showed that profits after tax fell 36% to €437m (£377m) for Q4 2010 compared with €682m for Q4 2009. However, it managed to increase profit after tax by 4% for 2010 as a whole, up to €1.82bn from €1.75bn.

SAP had to beef up provisions for a court battle against rival Oracle following the purchase of its TomorrowNow division. It was forced to pay damages. The company claims profit was also affected by restructuring costs of €5m in the fourth quarter.

However, SAP’s board will recommend to the supervisory board to increase dividend payments on shares by 20% to €0.60 from €0.50.

Software revenue increased 35% to €1.5bn for the fourth quarter of 2010

Under IFRS reporting, software revenue increased 35% to €1.51bn at the end of 2010 compared to the same period in 2009 of €1.12bn.

“We finished 2010 with the highest fourth quarter for software revenue in our history. Our strong performance and our business outlook for 2011 demonstrate that SAP is confident about achieving double-digit growth and continued margin expansion,” said Werner Brandt, CFO of SAP.

A statement from SAP said it believes the amount awarded to Oracle in the litigation is “disproportionate and wrong”.

The German IT giant hopes to file post-trial motions to reduce the amount of damages awarded to Oracle, or request a new trial. Because of this, SAP is unable to provide an exact provision amount.

The company set aside €56m for the litigation in 2009, which ended up costing €980m by the end of the trail in 2010.

 

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