Oct. 26 (Bloomberg) -- SAP AG, the largest maker of business management software, said third-quarter profit more than doubled on lower provisions for damages to Oracle Corp. in a copyright lawsuit.
Net income climbed to 1.25 billion euros ($1.7 billion) from 500 million euros a year earlier, the Walldorf, Germany- based company said in a statement today. SAP reduced its provision in a legal dispute over copyright infringement by its TomorrowNow unit by 723 million euros.
SAP reiterated its outlook and said it will reach its highest cash flow ever this year, allowing the software maker to “further evaluate” buying back shares. The company pre- released some earnings figures on Oct. 14.
“SAP’s third-quarter software revenue grew at its fastest rate in a decade because customers are shifting their investments to software that helps them grow and innovate,” co- Chief Executive Officer Bill McDermott said in the statement.
The company is counting on clients buying software to reduce costs or raise efficiency even as the economy slows. Its software sales have outpaced estimates in the last two quarters. Competitor Oracle last month reported fiscal first-quarter profit that beat analyst estimates, boosted by increased spending on database programs and applications that help run businesses, even as its hardware sales declined.
SAP shares rose 0.6 percent 42.84 euros in Frankfurt trading yesterday. The stock is up 12 percent this year, giving the company a market value of 52.6 billion euros. Oracle has gained 3.4 percent this year.
SAP, which makes applications to manage payrolls and sales organizations, also provides software for the order fulfillment system behind Apple Inc.’s iTunes download system.
The German company, whose customers include Coca-Cola Co., Procter & Gamble Co. and BP Plc., said Oct. 14 that software and related services sales rose 18 percent at constant currencies, based on non-international financial reporting standards, in the first nine months of the year.
At the time, SAP maintained its outlook for software and related services sales growth in 2011 to be at the upper end of a 10 percent to 14 percent range, prompting analysts including Michael Nemeroff from Morgan Keegan & Co. in New York to say this could make them reduce their fourth-quarter estimates.
--Editors: Rob Valpuesta, Kenneth Wong
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