SAP said software sales jumped by about a third in the fourth quarter, boosting operating margins and sending its shares higher despite uncertainty over U.S. litigation. Europe's biggest software maker said on Thursday it expected operating income of more than 3.9 billion euros ($1.98 billion) for 2010, which would push its operating margin to 31.5 percent from 27.4 percent in 2009, when not using international financial reporting standards (IFRS).

Traders and analysts welcomed the result and its shares closed 3.5 percent higher at 40.40 euros, reversing a loss earlier in the day on market speculation of a profit warning.

The numbers are better than expected and I really don't see any bad news here, analyst Heino Ruland, of Ruland Research, said.

The fact that the restructuring has not put pressure on the shares is a good sign too, and makes me optimistic about SAP, Ruland added.

Total fourth quarter revenue was 4.04 billion euros ($5.31 billion), an increase of around 27 percent year-on-year, with software revenue higher by around 34 percent at 1.5 billion euros.

Software-related service revenue rose 27 percent to 3.25 billion euros.

We are pleased to announce the best software sales quarter in the history of SAP, said Bill McDermott, co-CEO of SAP.

SAP said on Thursday it expected that a re-measurement of the provisions for the TomorrowNow litigation would have significant negative impact on SAP's preliminary fourth-quarter and full year 2010 IFRS operating profit and IFRS operating margin.

A U.S. court jury in November ruled that SAP must pay Oracle Corp $1.3 billion for software theft, dwarfing SAP's own estimate of the damages. SAP has acknowledged that its TomorrowNow subsidiary had wrongfully downloaded millions of Oracle's files.

SAP is due to give full 2010 results and an outlook for 2011 on January 26.

Software Lawsuit