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PeopleSoft Finds Advantages In Slump




Not every tech company is in the doldrums. PeopleSoft, whose customer-relationship-management, supply-chain, human-resources, and financial-management apps are designed to make companies more efficient and cut costs, reported a gangbuster second quarter. Profit was up 198% and revenue was up 27%. Moreover, company executives say there's plenty of reason for continued optimism. CEO Craig Conway told analysts during a conference call that PeopleSoft is more successful than ever in winning customers over Oracle and SAP.

For the quarter, ended June 30, PeopleSoft posted a profit of $47.4 million, or 15 cents per diluted share, on revenue of $532.7 million, compared with a profit of $15.9 million, or 6 cents, on revenue of $420.2 million a year ago. Much of the revenue growth was attributed to a 51% increase in licenses, and execs say they expect sales of the PeopleSoft 8 CRM app, launched in June, to help continue that licensing growth. This is the fifth straight quarter PeopleSoft has reported record revenue and profit.

Conway says PeopleSoft is actually benefiting somewhat from the economic slump in that companies are more focused than ever on productivity and expenses. Nevertheless, sales cycles are lengthening, he says. "We may have done better in Q2, but the rate of closing deals in the pipeline decreased," says Conway.

J.P. Morgan H&Q analyst Jim Pickrel says the results exceeded his expectations and indicated healthy market acceptance of PeopleSoft 8. Pickrel says that whereas Oracle was hurt in recent quarters by technical problems with its 11i E-business software, PeopleSoft has delivered on the promise of its CRM product. And leadership has something to do with the results, too. Says Pickrel, "Clearly, the story is that this is becoming a really well-managed company."


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