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Earnings Reports: ERP Down, CRM Up

Quarterly results from SAP, PeopleSoft, and Siebel Systems confirm the obvious: The market for enterprise resource planning software is continuing its free fall, while the customer relationship management software market continues to climb.

SAP, the largest ERP provider, reported profits for its fiscal second quarter fell 7%, to $146 million from $158.27 million in the second quarter of 1998. Revenue for the quarter was up 13% to $1.3 billion. However, product revenue grew only 1%. Hasso Plattner, SAP co-chairman and CEO, says the leveling off in profits is due primarily to the affect of year 2000 projects, which have diverted corporate resources from ERP installations.

PeopleSoft, which has had several bumpy quarters, showed little sign of improvement with second quarter revenue of $312.2 million, a 3% drop from the year-ago quarter's $320 million. The company eked out a profit of $3 million, but that's a substantial drop from the previous year's $39.2 million. PeopleSoft's revenue mix has changed: License fees dropped dramatically, falling from $148.9 million to $57.9 million this quarter, while service revenue increased 45% to become 80% of total revenue for the quarter.

On the flip side, front-office vendor Siebel Systems continued previous quarters' meteoric growth with revenue of $164.4 million, an 83% rise over $90 million in the second quarter last year. Net income was $25.8 million, up 115% from $12 million in the year-ago quarter. License fees increased 63% to $110.1 million, but dropped slightly as a percentage of Siebel's total revenue.

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