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SAP Earnings Down On Oracle Court Battle Cost

Fourth-quarter earnings at SAP AG dropped 36 percent after the business software maker set aside $1.3 billion to cover the cost of a lost court battle with rival Oracle.

BERLIN (AP) -- Fourth-quarter earnings at SAP AG dropped 36 percent, despite a strong rise in revenue, the company said Wednesday, after the German business software maker set aside €933 million (about $1.3 billion) to cover the cost of a lost court battle with bitter rival Oracle Corp.

SAP reported net earnings of €437 million in the October-December quarter, down from €681 million a year earlier. Its operating profit dropped 47 percent to €543 million from €1.02 billion.

The company's software revenue, however, rose 35 percent to €1.51 billion from €1.12 billion. Revenue for software and software-related services climbed 28 percent to €3.27 billion from €2.57 billion. Total revenue climbed 27 percent to €4.06 billion from €3.19 billion.

In November, a jury in the U.S. District Court for the Northern District of California found that SAP plundered software and documents from Oracle's secured websites and awarded Oracle $1.3 billion in damages.

SAP acknowledged that a now-shuttered subsidiary was secretly siphoning off instruction manuals and technical specifications for Oracle's software. But its lawyers argued that Oracle's claims of injury were exaggerated.

On Wednesday, SAP underlined its argument that the amount awarded to Oracle was "disproportionate and wrong."

The company said it intends to file post-trial motions in the coming weeks asking the court to reduce the damages or order a new trial. Depending on what happens to the motions, SAP said it "may consider an appeal."

For the whole of 2010, SAP's net profit increased by 4 percent to €1.81 billion from €1.75 billion. Operating profit was barely changed at €2.59 billion.

The company's full-year software revenue climbed 25 percent to €3.27 billion from €2.61 billion, while software and software-related services revenue climbed 19 percent to €9.79 billion from €8.2 billion. Its total revenue rose 17 percent to €12.46 billion from €10.67 billion.

Chief Financial Officer Werner Brandt said that, "in light of our excellent results and our confidence in our business going forward," the company would recommend a dividend increase to €0.60 per share from €0.50.

"Our strong performance and our business outlook for 2011 demonstrate that SAP is confident about achieving double-digit growth and continued margin expansion," he said.

Co-CEO Bill McDermott said that SAP showed "rock-solid revenue across the globe, particularly in the fast-growing emerging markets."

Shares of SAP, which is based in Walldorf, slipped 0.1 percent to €40.52 in Frankfurt trading.
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