TomorrowNow litigation drags SAP Q4 profits down

The company says it is "confident in 2011 and beyond"

SAP saw revenue rise 27 percent in the fourth quarter but profits dropped by more than a third due to increased provisions linked to litigation with Oracle related to its former TomorrowNow unit, the company said Wednesday.

Oracle sued and won US$1.3 billion in damages in a corporate theft lawsuit against TomorrowNow which downloaded software and support materials illegally from an Oracle website.

On Wednesday, SAP said it intends to fight the damages and laid out a course of action.

"SAP has great respect for the US legal system and Court decisions. However, SAP believes that the amount awarded by the jury in Oracle v. SAP/TomorrowNow is disproportionate and wrong," the company said.

"After the Court has entered final judgment 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 said.

It warned the amount by which the jury award would be reduced, if any, cannot be predicted, so legal provisions assumed in Wednesday's earnings statement could change.

Revenue in quarter ended Dec. 31 was €4 billion (US$5.3 billion at the exchange rate on the last day of the quarter), while net profit was €437 million. The results are calculated to international financial reporting standards and include the operations of Sybase after it was acquired by SAP on July 26 last year.

SAP expressed confidence for the coming year and said it performed extremely well in all key customer segments, and showed solid revenue worldwide, particularly in fast-growing emerging markets.

Software revenue in the fourth quarter was €1.51 billion, an increase of 35 percent over the same quarter in the previous year. Software and software-related service revenue was €3.27 billion, an increase of 28 percent.

Software revenue grew for the full year to €3.27 billion up by 25 percent, while software and software-related service revenue was €9.8 billion, an increase of 19 percent over the previous year. Full year revenue at €12.5 billion was up by 17 percent over the previous year, while net profit was €1.8 billion, up 4 percent.

John Ribeiro covers outsourcing and general technology breaking news from India for The IDG News Service. Follow John on Twitter at @Johnribeiro. John's e-mail address is john_ribeiro@idg.com

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