SAP (NYSE: SAP) took out a bit of the sting of losing a $1.3 billion copyright infringement case last November to rival Oracle, by reporting record sales for the fourth quarter that beat analyst's expectations as well as its own forecasts. The German enterprise software giant said preliminary sales results for the fourth quarter beat its own targets, but also warned that the payout to Oracle (NASDAQ: ORCL) in the high profile case will "have a significant negative impact" on operating profit.
Software and services helped drive SAP's record results, rising 20 percent to $13 billion. The news was greeted well by investors; SAP's stock jumped 6.25 percent to $54.38 in afternoon trading Thursday. The company is enjoying its strongest sales growth in years.
"We are pleased to announce the best software sales quarter in the history of SAP. We achieved outstanding growth in all regions and customer segments," Bill McDermott, Co-CEO of SAP, said in a statement.
SAP said it expects operating income of more than 3.9 billion euros ($1.98 billion) for 2010, a jump in the company's operating margin to 31.5 percent from 27.4 percent in 2009, when not using international financial reporting standards (IFRS).
SAP's software license growth was much stronger than Oracle’s in the last quarter, according to a report in Bloomberg quoting UniCredit Group analyst Knut Woller. "But that was one quarter; we have to see how it continues into this year," said Woller.
Although SAP admitted liability in the Oracle copyright infringement case for the actions of a now defunct subsidiary, TomorrowNow, the U.S. court jury's $1.3 billion judgment was well beyond what SAP estimated the damages should be. At one point during the trial, which included testimony by Oracle's CEO Larry Ellison, SAP offered to pay Oracle $120 million for its legal expensesif it did not seek punitive damages. Oracle reportedly sought $2.3 billion in damages.
Oracle has also made more aggressive moves lately to try and win over SAP customers. Earlier this week, Oracle released Oracle Financial Analytics for SAP, a new module in its Business Applications suite.
SAP scoffed at the news as an acknowledgement of how well the company's financial software is doing. SAP said it's been recognized as the market leader for business intelligence, EPM and analytic applications, by industry analysts at Gartner and Forrester Research. SAP said it has more than twice the share of Oracle in core financial applications.
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