PeopleSoft profits higher than expected
Published: 22 Oct 2004 09:40 BST
In its takeover dance with Oracle, PeopleSoft pulled out some fancy footwork on Thursday, reporting third-quarter earnings that exceeded its own estimates.
The software company, target of a 16-month hostile takeover bid from Oracle, reported a third-quarter profit before certain charges of $62m, or 17 cents a share, on revenue of $699m. The company had forecast earlier this month that revenue would not exceed $695m and that earnings would not top 14 cents a share.
While PeopleSoft's earnings per share were flat compared with the same period last year, the company saw revenue grow by 12 percent year-on-year. That growth came from a surge in maintenance revenue, which increased 36 percent to $320m from $235m in the same quarter a year ago.
However license revenue, a key indicator of future growth, was almost flat compared with last year at $161m. Professional services revenue declined slightly to $217m from $229m last year.
PeopleSoft chief executive Dave Duffield, who was brought in earlier this month to replace Craig Conway, made a few brief comments about the ongoing Oracle bid, during a teleconference. The comments appear to leave the door open, or at least ajar, for Oracle.
"It's been amusing to listen to what people think I'm going to do," Duffield said. "Some people have speculated that I'm here to sell the company to Oracle. Others are guessing I'm here to block a sale. Both are wrong. I'm here to make sure that our company obtains its full potential, something that absolutely enhances value to our shareholders."
PeopleSoft ousted Conway about the same time the US Justice Department decided to drop its effort to challenge an Oracle takeover on antitrust grounds. Conway was staunchly opposed to an Oracle merger, and his departure is a signal to some observers that the company is softening its stance against the deal.
PeopleSoft earned $24m, or 6 cents a share, under generally accepted accounting principles. In the same quarter last year, the company lost $7.3m or 2 cents per share on a GAAP basis, which includes costs related to its $1.8bn acquisition of JD Edwards.
In a statement, the company's chief financial officer, Kevin Parker, lauded PeopleSoft's third-quarter financial performance as delivering "the hallmarks of a healthy and vibrant company".
The comments run counter to testimony earlier this month from Oracle executives during its court fight to overturn a number of PeopleSoft's anti-takeover measures. During the trial, Oracle president Safra Catz testified that PeopleSoft is in peril and that its financial condition may have fallen by as much as a third since the beginning of the year.
It's unclear whether Thursday's earnings report will give PeopleSoft more leverage should it come to the negotiating table with Oracle. Oracle has said, also during the trial, that it has considered changing its $21 per share bid, but has been coy about which direction it would go.
Oracle extended the $7.7bn bid on Thursday through Nov. 5. It was set to expire Friday. The company is still waiting for permission from European antitrust regulators to go ahead with the deal and for a ruling in the Delaware trial, which wrapped up last week.
The company said it spent more than $5m defending itself against Oracle's takeover attempt.
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