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    SAP Wrestling with Oracle Trial Fallout, Despite Strong Earnings

    By
    Nicholas Kolakowski
    -
    January 26, 2011
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      SAP announced solid quarterly results and financial forecasts for 2011, even as the company seeks to put a bruising court battle with Oracle in the rearview mirror.

      For the fourth quarter 2010, SAP earned about $5.54 billion in total revenues, with an after-tax profit of around $597 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 totaled $4.4 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.

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

      Oracle’s lawsuit accused SAP’s now-shuttered TomorrowNow division of illegally downloading support documentation and more than 8 million instances of customer-support software. SAP apologized for TomorrowNow’s conduct, even as the Oakland, Calif., federal district court leveled a $1.3 billion judgment. Despite SAP agreeing to pay some $120 million in court costs to Oracle, the latter asked the court for another $211 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.”

      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 acquisition of Sybase, announced in May 2010, was widely seen as a way for the company to not only 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, and try to fend off companies such as Microsoft that are pouring more resources into the enterprise space.

      Nicholas Kolakowski
      Nicholas Kolakowski is a staff editor at eWEEK, covering Microsoft and other companies in the enterprise space, as well as evolving technology such as tablet PCs. His work has appeared in The Washington Post, Playboy, WebMD, AARP the Magazine, AutoWeek, Washington City Paper, Trader Monthly, and Private Air. He lives in Brooklyn, New York.

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