January 26, 2011 / 7:02 AM / in 7 years

UPDATE 3-SAP raises dividend 20 percent, upbeat on 2011

* Sees 2011 EBIT at 4.45-4.65 billion euros

* Sees 2011 SSRS revenue up 10-14 percent

* Dividend raised 20 percent, in-line with I/B/E/S

* To file motion to reduce damages in SAP/Oracle trial

* Shares down 0.5 percent

(Adds analyst’s comment, background, updates share price)

By Nicola Leske

FRANKFURT, Jan 26 (Reuters) - German business software maker SAP (SAPG.DE) forecast double-digit revenue growth this year and raised its dividend 20 percent, seeking to refocus investor attention on its prospects after a damaging court battle with U.S. rival Oracle ORCL.O.

“We showed rock-solid revenue across the globe (in the fourth quarter), particularly in the fast-growing emerging markets,” Co-Chief Executive Bill McDermott said on Wednesday.

Chief Financial Officer Werner Brandt said the dividend hike to 0.60 euros showed “confidence in our business going forward”.

SAP shares were slightly lower as analysts and traders pointed to a strong run-up in the shares prior to the results, adding that the dividend increase was in line with expectations.

At 0936 GMT, SAP shares were down 0.5 percent, with the STOXX Europe 600 technology index .SX8P up 1.1 percent.

The shares have gained 6.5 percent since the beginning of the year, and 12 percent since the beginning of December, outperforming an 11 percent rise in the STOXX Europe 600 technology sector index .SX8P.


“SAP performed well in the past weeks, so it’s not too big of a surprise that we don’t see an upside move today as some investors cash in,” said Thomas Becker, analyst at Commerzbank, who has an “add” rating on the stock.

“Also the revenue guidance is realistic, but not too ambitious. It could have been a bit more,” he added.

The company said key non-IFRS software and software-related service (SSRS) revenue, that includes revenue from license sales and maintenance services, was expected to rise 10-14 percent this year at constant currencies.

Operating profit was seen in a range of 4.45-4.65 billion euros ($6.09-$6.36 billion) and operating margin was expected to rise 0.5-1.0 percentage points.

    Its 2010 operating profit was 4.00 billion euros with SSRS revenue of 9.87 billion. The operating margin was 31.9 percent.

    SAP bases its key outlook figures on non-international financial reporting standards, which exclude acquisition-related charges for example, because, SAP says, it allows investors a better comparison of year-on-year operating performance.

    “They have done a good job rebuilding confidence. The next challenge will be to generate revenue with new products,” Gartner analyst Thomas Otter said.

    “Lots of software companies have had good quarters...and SAP was coming off a pretty grim 2009, so comparisons have been pretty easy.”

    U.S. technology bellwethers Oracle and IBM (IBM.N) have also reported strong software sales and on Wednesday smaller UK accountancy software firm Sage Group (SGE.L) said in a trading statement it had seen a continued gradual recovery in spending by small businesses in the last three months, with growth spreading to North America. [ID:nLDE70P0A3]


    SAP also said on Wednesday it had increased provisions for the Oracle legal battle by 933 million euros to around 1 billion, after a U.S. jury ruled in November that SAP must pay Oracle $1.3 billion to settle a data theft case, dwarfing SAP’s estimate of the damages. [ID:nLDE6AN0I8]

    SAP said it intended to file post-trial motions asking the court to reduce the damages or order a new trial. Depending on the outcome, it may consider an appeal.

    SAP, whose more than 105,000 customers include Apple (AAPL.O), Audi (NSUG.DE), GE (GE.N), McDonald’s (MCD.N) and Pepsi PEP.N, bills itself as the world’s leading provider of software for managing supply chains and customer relations. ($1=0.7311 euros) (Additional reporting by Christoph Steitz; Editing by Dan Lalor, Greg Mahlich)

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