SAP AG (SAP) reported fourth quarter 2009 earnings per share from continuing operations of 93 cents, matching the Zacks Consensus Estimate.

For the quarter, U.S. GAAP software and software-related service revenues were euro 2.57 billion, a decrease of 4%. U.S. GAAP total revenues were euro 3.19 billion ($4.71 billion), a decrease of 9% over the corresponding prior year quarter. U.S. GAAP software revenues were euro 1.12 billion, a decrease of 15%

In the fourth quarter of 2009, SAP closed major contracts in several key regions including Achmea and Rabobank Nederland, Aeroflot Russian Airlines, AOK, Credit Agricole S.A., Deutsche Bank AG, Hilti AG, NMBS-SNCB Group, and Talanx AG in EMEA; 3M Company, Baker & McKenzie, Dairy Farmers of America, Inc., Pfizer Inc., Servicios Nacional de Chocolates S.A., Sybase Inc., Verizon Services Corporation, and W.W. Grainger, Inc. in the Americas.

U.S. GAAP operating margin was 33.1% (2008: 36.6%), a decrease of 3.5 percentage points. U.S. GAAP income from continuing operations was euro 0.75 billion (2008: euro 0.86 billion), a decrease of 13%.

In 2009, the company significantly reduced Non-GAAP operating expenses by around euro 650 million to euro 7.8 billion despite restructuring costs of approximately euro 200 million. The Non-GAAP operating margin at constant currencies was 27.6%, which included a negative impact of 1.8 percentage points related to the restructuring charge.

For 2010, SAP will maintain strict cost controls with a spotlight on further margin expansion.

SAP is providing the following outlook for the full-year 2010: The company expects full-year 2010 Non-IFRS software and software related service revenue to increase in a range of 4% to 8% at constant currencies SAP expects its full-year 2010 Non-IFRS operating margin to be in a range of 30% – 31% at constant currencies. The company projects an effective tax rate of 27.5% – 28.5% (based on
IFRS) for 2010.

SAP is the world’s leading provider of business software, offering applications and services. Its business applications include SAP ERP, which consists of SAP ERP human capital management, SAP ERP financials, SAP ERP operations, and SAP ERP corporate services; Major competitors include Microsoft Corporation (MSFT) and Oracle Corporation (ORCL).

We currently have a Neutral recommendation on SAP.

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