INTERVIEW-UPDATE 1-Software AG sees sales, profits up in 2010

* Co hikes FY 2009 outlook, posts Q3 results above forecasts

* Larger takeovers possible again in 2-4 years -CEO

* Sees no reason not to pay div for 2009 -CEO

* Shares up 2.6 pct, outperforming pan-European tech index

(Adds CEO quotes, details, background)

By Christoph Steitz and Kathrin Schich

FRANKFURT, Nov 5 (Reuters) - Software AG (SOWG.DE), Germany's second-biggest software maker after SAP AG (SAPG.DE), is bullish about prospects, expecting sales and profits to grow next year, its chief executive told Reuters on Thursday.

"We see further contributions to our growth in 2010," Karl-Heinz Streibich said in an interview, adding the company expected higher revenue and profit.

Shares in the company were 2.6 percent higher by 0824 GMT, outperforming the DJ Stoxx European Technology Index .SX8P, that stood 1.4 percent lower.

The company earlier on Thursday hiked its full-year 2009 outlook and said it expects an EBIT margin of 25 to 25.5 percent and sales of 835 million euros ($1.2 billion) to 845 million, after delivering forecast-busting third-quarter results. [nWEA8853]

This was mainly due to the company's takeover of peer IDS Scheer (IDRG.DE), announced in July [nLD173105], to beef up its business at a time when software companies find themselves fiercely competing for market share.

Germany's SAP last week cut its sales outlook on weakness in emerging markets [nLR57363], while in the United States Oracle Corp (ORCL.O) in September posted software sales below expectations. [nN16146835]

Regarding future M&A activity, Streibich said larger acquisitions -- such as of IDS Scheer -- were possible again in two to four years' time.

"Now, the priority lies on Software AG's internal consolidation," he said.

Asked about a possible dividend for financial year 2009, Streibich said there was no reason not to pay one out, noting a final decision lies with the annual shareholders' meeting.