PeopleSoft meets revenue targets

PeopleSoft released its full financial report for the quarter just ended, confirming the better-than-anticipated revenue and...

PeopleSoft released its full financial report for the quarter just ended, confirming the better-than-anticipated revenue and income results it preliminarily announced earlier in the month.

PeopleSoft posted revenue of $497.4m (£313m) in its second quarter, ending 30 June, up 3% from last year's $482.2m.

Licence revenue was down 15% to $111.7m (£70m), while professional services revenue also dipped slightly. A rise in maintenance revenue rose to $205.6m (£129m)compared with $171.3m last year.

PeopleSoft chief executive officer Craig Conway called the quarter a strong one and said the financial results reflect PeopleSoft's across-the-board healthy operations in all of its product lines and geographies.

PeopleSoft's net income for the quarter was $36.5m (£23m) up fractionally from the $36m total the same quarter last year.

PeopleSoft met the financial targets it set for the quarter before Oracle launched its $6.3bn unsolicited takeover bid, a feat that helps it in its bid to rebuff its hostile suitor.

Defending against Oracle has cost PeopleSoft $14m (£8.8m) so far, and will cost an additional $10m to $12m in the ongoing quarter, chief financial officer Kevin Parker said.

While Oracle has accused PeopleSoft of hitting its quarterly targets by cashing in favours from business partners and through other "one-time gimmicks", Conway insisted that the company has not drained its pipeline or called in favours.

PeopleSoft added more than 100 new customers during the quarter, making it one of its best in two years, he said, citing a higher conversion rate of turning prospects into customers as the key to the quarter's strength.

Conway and Park dismissed questions about the effects of PeopleSoft's "customer assurance programme", a contractual clause offered to some customers during the quarter that promised large payments in the event PeopleSoft is taken over by a company that disrupts its product support.

The executives said they will consider offering the programme again if customer requests warrant, but they maintained that it did not influence customers' purchasing decisions during the quarter.

"It's like buying fire insurance for your house. There's certainly a good reason to buy fire insurance for your house, but it's not the reason you buy the house," Parker said.

The company's tender offer to acquire shares of JD Edwards expired yesterday (17 July), after which PeopleSoft intended to close its $1.8bn acquisition of its fellow enterprise applications developer.

Conway said Oracle's bid for PeopleSoft has reinforced his belief that marrying PeopleSoft and JD Edwards is a powerful combination. He also claimed that Oracle's takeover attempt will, ultimately, aid PeopleSoft, because of the self-inflicted damage being done to the reputation of one of its most formidable rivals.

Stacy Cowley writes for IDG News Service

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