Posted by : trraju on Apr 27, 2004 - 09:59 AM General

SAN FRANCISCO, Apr 23, 2004 (AFX-UK via COMTEX) -- PeopleSoft shares retreated Friday morning after the business-software company narrowly missed Wall Street's earnings expectations and served notice that it may fall short again in the current quarter. Acknowledging that profits have been dragged down by fighting Oracle's takeover bid, PeopleSoft reported a first-quarter net profit of $24 million, or 7 cents a share, on $643 million in revenue.
Excluding one-time charges, Pleasanton, Calif.-based PeopleSoft earned $62 million, or 17 cents a share. Although those results matched the company's own projections, analysts polled by Thomson First Call estimated PeopleSoft would make a profit of 18 cents a share on revenue of $646 million.

During the same period a year ago, PeopleSoft earned $38.5 million, or 12 cents a share, on revenue of $460 million. The company said its results included charges for purchase-accounting adjustments related to it acquisition of J.D. Edwards.

In morning trading on Wall Street, the stock fell 83 cents, or 4.3 percent, to $18.06 on volume of nearly 2.8 million shares.

Chief Financial Officer Kevin Parker indicated that PeopleSoft may fall short of Wall Street's earnings target for the second quarter.

Parker estimated earnings of 20 cents to 22 cents a share on revenue of $645 million to $695 million in the second quarter, excluding some charges. Analysts surveyed by Thomson First Call forecast a profit of 22 cents a share on $697 million in revenue.

Parker also pegged PeopleSoft's software-license revenue between $150 million and $170 million.

PeopleSoft said that licensing revenue, a key measure of many business-software companies' health, rose to $131 million in the first quarter, up from almost $81 million during the same period a year ago.

Chief Executive Craig Conway said the company was "delivering as expected" in spite of being distracted by its efforts to fend off Oracle's $9.4 billion hostile takeover bid. On a conference call to discuss PeopleSoft's results, Conway was upbeat about PeopleSoft's results and outlook, hinting that he believes the buyout offer by Oracle will eventually fail.

"For those of the (glass is) half-empty persuasion, you can find room in the glass," Conway said. "With the final resolution of the Oracle (matter), some deals that are being held back will be released," Conway said.

In the second quarter, PeopleSoft's net income, including charges related to fighting the Oracle bid, should be between 10 cents and 12 cents a share. Parker said PeopleSoft has so far spent about $55 million in order to defend itself since Oracle launched its bid in June 2003.

Patrick Mason, an analyst with Pacific Growth Equities, said he believes PeopleSoft shares are undervalued, and the company should be able to put more emphasis on it customers, as opposed to fighting Oracle, through the rest of the year.

"With most of this (Oracle issues) behind them, we believe they will experience less distraction and a resumption of some deals that were stale in the pipeline," Mason said, in a research note. Mason maintains an "overweight" rating on PeopleSoft's stock.

This story was supplied by CBSMarketWatch. For further information see www.cbsmarketwatch.com.

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