PeopleSoft Lowers First-Quarter Estimates

PeopleSoft released preliminary financial results for the quarter ended March 31, 2002, and said license revenue is expected to be in the range of $130 million to $135 million. The company says earnings per share from recurring operations are expected to be 14 cents, 3 cents higher than the first quarter of 2001. However, PeopleSoft officials say weak product sales hurt the company this quarter.

"Although consulting revenue and maintenance revenue were on plan, and earnings per share are expected to meet our original guidance, license revenue clearly reflected a cautious economic environment," said PeopleSoft president and CEO Craig Conway in a statement. "However, we remain confident that our industry-leading PeopleSoft 8 pure Internet enterprise applications will drive continued overall growth in 2002."

PeopleSoft said earlier this year that it expected to earn 14 to 15 cents a share on revenue of $160 million. The company celebrated record results for its fourth quarter 2001 just a few months ago, with $174 million in license revenue. The severe drop-off caused several financial analysts to lower their ratings on the company this week.

In addition, PeopleSoft has undergone several significant changes over the last year, including a restructuring of its services business, PeopleSoft Consulting, which accounted for $1.3 million in revenue for 2001, more than twice the revenue generated by license fees last year. The company has also made some merger moves as well. PeopleSoft recently agreed to acquire certain properties and assets of Calico Commerce, which specializes in software configuration, and also plans to buy back Momentum Business Applications, which PeopleSoft spun off in 1998.

PeopleSoft also shifted from ERP software and launched its long-awaited PeopleSoft CRM 8 last, which was praised by customers and analysts for its Web-based architecture. While the CRM splash helped spark a comeback for software vendors last year, PeopleSoft is facing an uphill battle against CRM leader Siebel Systems as well as stiff competition in the ERP software market from Oracle and SAP.