SAP Posts Sharp Profit Drop Due to Oracle Lawsuit

Jan. 26, 2011
Lawsuit cost $1.3 billion

Professional software maker SAP posted on Jan. 26 reported a drop in fourth quarter earnings owing to a defeat in a court case involving rival Oracle. The company nonetheless expects to record stronger results in 2011, saying that its operating profit at constant exchange rates should increase by 11%-16% from the level in 2010 to 4.45-4.65 billion euros (US$$6.08-6.36 billion).

Sales of software and related services are forecast to gain 10%-14% and operating margin should rise by 0.5 to 1.0 percentage points, the group said.

In the fourth quarter of 2010 however, SAP's net profit dropped 36% to 437 million euros, while its operating profit margin was cut by more than half to 13.4% from 32% in the same period a year earlier.

Sales rose however by 27% to four billion euros.

The poor net profit was largely the result of 933 million euros in provisions taken by SAP in November after it lost a copyright lawsuit filed by Oracle. SAP was ordered by a jury to pay $1.3 billion to the U.S. company, an amount SAPs "disproportionate and wrong."

"SAP intends to file post-trial motions in the coming weeks asking the court to reduce the amount of damages awarded, or to order a new trial," it added.

For 2010 as a whole, SAP sales were 17% stronger at 12.4 billion euros, and net profit gained 4% to 1.8 billion euros.

Copyright Agence France-Presse, 2011

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