Strong SAP Revenues Despite The Oracle Trial

SAP announced solid quarterly results and financial forecasts for 2011, even as the company sought to put its bruising court battle with Oracle in the rear-view mirror.

SAP’s release about its earnings also drilled down into the company’s recent court battle against Oracle. “SAP has great respect for the US legal system and court decisions,” it read. “However, SAP believes that the amount awarded by the jury in Oracle v SAP/TomorrowNow is disproportionate and wrong.”

Counting The Cost Of A Damaging Year

Oracle’s lawsuit accused SAP’s now-shuttered TomorrowNow division of illegally downloading support documentation and more than eight million instances of customer-support software. SAP apologised for TomorrowNow’s conduct, even as the US federal district court levelled a $1.3 billion (£816 million) judgment. Despite SAP agreeing to pay some $120 million (£75 million) in court costs to Oracle, the latter asked the court for another $211 million (£132 million) in interest.

SAP apparently plans to file post-trial motions in coming weeks, seeking to reduce the damage award. “Depending on the outcome of the post-trial motion process, SAP may consider an appeal,” reads the earnings statement. “Because the motions have not yet been filed and the outcome of the motions remains uncertain the amount by which the jury award would be reduced cannot be reliably measured at this time.”

For the fourth quarter 2010, SAP earned about $5.54 billion (£3.48 billion) in total revenues, with an after-tax profit of around $597 million (£375 million). While that represented a 27 percent year-over-year increase for revenue, it also marked a 36 percent reduction in profit over the same period. Software and software-related service revenue totalled $4.4 billion (£2.8 billion), a year-over-year increase of 28 percent.

“Our strong performance and business outlook for 2011 demonstrate that SAP is confident about achieving double-digit growth and continued margin expansion,” Werner Brandt, SAP’s CFO, wrote in a statement posted on SAP’s Website.

As with all companies in the enterprise software business, SAP is constantly seeking out new ways to remain competitive within a rapidly changing landscape. Its $5.8 billion (£3.6 billion) acquisition of Sybase, announced in May 2010, was widely seen as a way for the company not only to create a new revenue stream, but also consolidate and expand its offerings via Sybase’s mobile technology. In theory, that would allow the company to stay competitive with Oracle, while trying to fend off companies such as Microsoft that are pouring more resources into the enterprise space.