SAP confident over legal dispute with Oracle

SAP, the world’s largest maker of business software, said it did not expect to pay large sums in the course of a legal dispute with US rival Oracle, which accuses the German company of corporate theft.

Henning Kagermann, SAP chief executive, told the Financial Times on Thursday: “SAP reckons it won’t have to cope with a significant burden,” even after admitting a US subsidiary made “inappropriate downloads”, one of 150 charges filed by Oracle.

Mr Kagermann’s comments came as SAP’s performance in the second quarter of the year suggested it has regained its footing after a jittery turn of the year. Investors cheered yesterday’s better-than-expected numbers and sent the group’s stock higher.

After twice missing performance targets last year, SAP further rattled investors at the start of 2007 when it said it would take €400m ($552m) out of profits over two years to invest in a new class of software to attract small companies.

However, in April, May and June, strong economic growth in Europe drove a sharp rise in software-licence sales to €715m; 18 per cent more than in the same period last year and an important indicator of future services revenue.

Operating income rose 10 per cent to €556m and total sales increased at the same rate to reach €2.4bn. Software and services revenue rose 16 per cent to €1.7bn, with SAP repeating it expected a 12-14 per cent gain in the full year.

Mr Kagermann said software launched last year was attracting an increasing number of customers. A web-based product for small companies – to be hosted on SAP computers – was on schedule to be launched next year. The company’s stock was €2.29 or 6.06 per cent higher at €40.065 per cent in Frankfurt, back around the €40-€45 per share level seen before investors were disappointed in the second half of last year.

The German company emphasised how relaxed it remains about the suit filed by Oracle. The suit alleges SAP’s US subsidiary, Tomorrow Now, stole intellectual property from Oracle servers “on a grand scale”. Mr Kagermann said SAP was not making “materially relevant” provisions to cover potential costs from a suit. “There’s a [pre-trial] hearing in September and we look forward to hearing a third opinion from a judge.”

SAP has dismissed two Tomorrow Now employees and it has suspended one manager in regard to the downloads. Mr Kagermann said the downloads had breached in-house rules. “But we don’t think any substantial damage was done” to Oracle, he added.

Although he described himself as confident in regard to SAP’s case relating to the other charges, Mr Kagermann said he was also a “pragmatist” who would decide whether to pursue proceedings or to settle “depending on what is best for SAP”.

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