SAP shares sink on Q3 earnings report

German business software maker misses consensus profit estimates; maintains outlook for year

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Shares of business software giant SAP AG took a big hit in early trading Wednesday after the German company reported third-quarter results that showed a 12 percent increase in net earnings but failed to match analysts' forecasts.

SAP's stock (NYSE: SAP) was down 2.73, or 5.05 percent, to 51.35 in early afternoon trading. Shares had dipped as low as 51.17 Wednesday morning.

Third-quarter net profit increased to EUR501 million from EUR447 million in last year's Q3, but fell well short of analysts estimates of EUR560 million. However, the shortfall was due in large part to the cost of acquiring Sybase in July for $5.8 billion and SAP's increase in provisions for a pending intellectual property-theft lawsuit filed in California by Oracle Corp. that begins next Monday (more on that later today).

Oracle claims its business suffered losses in excess of $1 billion due to the alleged theft by TomorrowNow Inc., a now-defunct SAP subsidiary. SAP in August said it would pay restitution, but disputes the billion-dollar figure.

Revenue from SAP's software and software-related services was up 20 percent to EUR2.32 billion, falling slightly short of the EUR2.33 billion anticipated by analysts.

SAP reaffirmed its full-year guidance, estimating that revenue for software and services will come in between 9 percent and 11 percent above last year's revenue of EUR8.2 billion, and that its operating margin will be between 30 percent and 31 percent, comfortably above last year's operating margin of 27.4 percent.

In a statement accompanying the earnings report, SAP's chief financial officer Werner Brandt said, “All of the regions reported growth in the third quarter, with particular strength in the U.S. and the emerging markets of Asia, Europe and Latin America. We saw a good mix of revenues among small, midsized and large enterprises, and we had an increase in deal volume. On the product side, Business Analytics remains a top priority among our customers and continues to be a principal growth driver.”

Chris Nerney writes about the business side of technology market strategies and trends, legal issues, leadership changes, mergers, venture capital, IPOs and technology stocks. Follow him on Twitter @ChrisNerney.

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