UPDATE 4-SAP sees higher 2010 sales, margin in tough market

* Sees key sales growth of 4-8 pct

* Sees 2010 operating margin rising to 30-31 pct

* Shares flat in weaker German market

(Adds executive comments on dividend, Oracle case)

By Nicola Leske

FRANKFURT, Jan 27 (BestGrowthStock) – Germany’s SAP (SAPG.DE: ) on
Wednesday forecast a slow recovery for global business software
markets as companies remain wary about investing.

The fierce rival to U.S. software company Oracle (ORCL.O: )
said it expects to increase core sales and operating margins
this year and hopes to return to double-digit growth in 2011.

The firm surprised investors two weeks ago with a strong
fourth-quarter performance in Asia, a sign that some tight
corporate budgets may be easing.

Those numbers chimed with positive results from Oracle Corp
(ORCL.O: ), the world’s No.2 maker of business software, and Tibco
Software Inc (TIBX.O: ) which also suggested that IT spending by
business is flickering into life. [ID:nWNBB3879]

SAP, whose more than 92,000 customers include McDonald’s
(MCD.N: ), Pepsi (PEP.N: ), Audi (NSUG.DE: ), Apple (AAPL.O: ) and GE
(GE.N: ), bills itself as the world’s leading provider of software
to help companies manage supply chains and customer relations.

“What we see is that the markets are still cautious,” SAP
Chief Executive Leo Apotheker told Reuters Insider.

“What we see in 2010 is it’s going to be a very slow road to
recovery..But that shouldn’t prevent us from being more

“In 2010 it’s a stepping stone year, we want to recover our
growth path again … and if that works out then I hope that in
2011 we can talk about double-digit growth again,” Apotheker


SAP, which is switching to IFRS reporting from U.S GAAP,
said it expected 2010 non-IFRS software and software related
service revenue to increase 4-8 percent at constant currencies
after a 5 percent decline last year.

It aims to reach a full-year 2010 non-IFRS operating margin
in a range of 30-31 percent at constant currencies, up from 27.4
percent in 2009.

SAP shareholders can expect a payout of at least 50 cents
per share after Chief Financial Officer Werner Brandt said the
dividend would not be cut.

DZ Bank analyst Oliver Finger said in a note that the
company’s guidance was in line with the bank’s assumptions “but
slightly misses the street consensus in terms of operating
margin at constant currencies”.

LBBW analyst Stephan Wittwer said consensus was for a 2010
operating margin of between 31.5 and 32 percent.

Merck Fink analyst Theo Kitz said he expected SAP to
implement further cost cuts to reach the margin target but
Apotheker told journalists there would be no further massive
cost cutting programme.

In a first for the company, SAP shed 3,000 jobs to cushion
the impact of a sharp drop in sales in late 2008.

SAP trades on a 12-month forward price/earnings ratio of
15.9 times, a premium to Oracle’s 14.3, according to Thomson
Reuters StarMine, which weights estimates by analysts’ previous

Oracle has filed a lawsuit against SAP accusing the company
of intellectual property theft.

SAP said it had hiked provisions for the lawsuit to $100
million by end 2009, suggesting that a settlement was not on the
horizon because damages sought by Oracle could top 1 billion.

SAP shares were roughly flat at 1441 GMT at 32.76 euros,
compared with a 0.3 percent fall in Germany’s blue-chip DAX
index (.GDAXI: ).

($1=.7097 EURO)


(Additional reporting by Angelina Ong; Editing by David Cowell)

UPDATE 4-SAP sees higher 2010 sales, margin in tough market