Removing J.D. Edwards reveals PeopleSoft weakness
Published: 10 Mar 2004 09:55 GMT
Excluding revenue gained from a large acquisition, PeopleSoft's software licence revenue declined by more than 20 percent last year compared with 2002, the company disclosed in a regulatory filing.
The revelation supports rival Oracle's claims that PeopleSoft's sales have declined more sharply than those of its other competitors. Oracle is pursuing a hostile $9.4bn (£5.16bn) acquisition of PeopleSoft and now faces a court battle to prove the proposed merger would not harm competition, as federal regulators have charged.
With last week's filing, PeopleSoft reported for the first time that its purchase last year of J.D. Edwards contributed $114.9m in licence fees to its 2003 revenue. Previously, the company had lumped revenue from J.D. Edwards and the rest of its software business together, obscuring the financial picture of the separate units.
License fees at Oracle and SAP, PeopleSoft's two closest competitors, also declined in 2003, but not as much. SAP's license revenue declined 6 percent in 2003. Oracle, which ends its fiscal year on 31 May, reported a 14 percent slide in application license fees in 2003. But in the six months from June to December, Oracle grew its applications licence revenue by 11 percent.
In the enterprise software industry, licence fees indicate how well a company's core products are selling, and they're regarded among Wall Street analysts as a key indicator of financial health.
PeopleSoft completed its purchase of J.D. Edwards on 18 July, an acquisition the helped the company leapfrog Oracle to become the No. 2 business applications company in the world behind Germany-based SAP.
PeopleSoft blames the drop in 2003 licence revenue on disruptions caused by the US-led invasion of Iraq last year and slack software spending by government agencies, which have been a traditional stronghold for the company. PeopleSoft executives have also blamed Oracle for falling sales, claiming that the hostile bid has scared some potential customers away.
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