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SAP reported robust revenue and profits for third-quarter 2010, although competitive challenges and an upcoming lawsuit with Oracle both cloud what would otherwise be a crystal-clear story of economic recovery.
SAP reported quarterly software and software-related service revenues of $3.19 billion, a 20 percent increase over the same quarter in 2009. After-tax profits reached $690 million, representing a year-over-year rise of 12 percent. The company reported growth in the United States, Asia, Europe and Latin America.
“We saw a good mix of revenues among small, midsized and large enterprises, and we had an increase in deal volume,” Werner Brandt, CFO of SAP, wrote in an Oct. 27 statement. “On the product side, Business Analytics remains a top priority among our customers and continues to be a principal growth driver.”
However, SAP’s earnings statement noted increased costs associated with the company’s Oracle lawsuit, as well as “acquisition-related charges” related to Sybase. SAP’s $5.8 billion acquisition of Sybase, announced May 12, was widely seen as a way for the company to expand its mobile offerings and stay competitive via new revenue streams; it marked SAP’s largest purchase since its $6.7 billion takeover of business intelligence software producer BusinessObjects in 2008.
SAP has seen a rise in revenues of late, as businesses begin to spend more heavily on IT in the wake of a massive global recession. But the company’s competitors, including Microsoft and Oracle, have also used the brightening enterprise landscape to aggressively push their own products-pressuring SAP to sign new customers and buttress its existing offerings.
“The experience we have gained with our more than 100,000 customers over many years tells us that they want choice, openness and innovation from their technology partners,” Jim Hagemann Snabe, co-CEO of SAP, wrote in an Oct. 27 statement. “The opposite seems to be happening as more technology companies want to lock in their customers to a single vendor on one proprietary technology stack.”
That backhanded swipe seems directly aimed at SAP competitor Oracle, whose corporate strategy revolves around consolidating enterprise IT services.
SAP and Oracle find themselves locked in a vicious lawsuit, with the latter claiming that SAP subsidiary TomorrowNow stole its software documentation and confidential material via unauthorized access to a customer support Website. For its part, SAP claims it never saw Oracle’s data, although it did acknowledge the illegal downloads taking place.
In a motion filed Oct. 22, SAP’s lawyers asked a federal judge for a gag order on Oracle. Nonetheless, Oracle CEO Larry Ellison issued an Oct. 26 statement accusing Leo Apotheker, SAP’s former CEO, of “overseeing an industrial espionage scheme centering on the repeated theft of massive amounts of Oracle’s software.”
Ellison used that statement to broadside another major competitor, Hewlett-Packard. “I don’t think [HP chairman] Ray Lane wants to risk Leo Apotheker testifying under oath as to why he allowed the theft of Oracle’s property to continue for eight months after he was made sole CEO of SAP,” he wrote. “I hope I’m wrong, but my guess is that HP’s new chairman, Mr. Lane, will keep HP’s new CEO, Mr. Apotheker, far, far away from the courthouse until the trial is over.”
The trial is expected to begin Nov. 1.