PeopleSoft Makes Another Buy

PeopleSoft Inc. continues to bolster its business, even as Oracle's $7.5 billion hostile takeover hangs in the background.

PeopleSoft said Tuesday it's buying JCIT International Inc.'s Demand Flow software for lean manufacturing. PeopleSoft says it will combine the technology with its supply-chain software to help companies improve flexibility, cut inventory, and reduce waste in their organizations and across their supply chains.

Mike Dominy, senior analyst at the Yankee Group, says PeopleSoft's attention to lean manufacturing--a capability that's extremely important to automotive and other manufacturers--is clear proof that PeopleSoft better understands the manufacturing industry since its $1.8 billion acquisition of J.D. Edwards & Co.

But he says it's surprising that PeopleSoft made another acquisition so quickly, considering the size, scope, and complexity of the J.D. Edwards acquisition. "There are a lot of business issues they need to rationalize in their supply-chain offerings, because there is definitely overlap" between PeopleSoft and J.D. Edwards, Dominy says. "This could add one more thing to worry about."

The product acquisition comes one day after PeopleSoft said its third-quarter results would exceed management expectations set a month ago. PeopleSoft did not release specific numbers but said its sales of new software licenses, total revenue, and earnings per share will exceed its estimates released in early September. At that time, PeopleSoft estimated its third-quarter revenue would range from $575 million to $590 million. The estimates exclude charges relating to the J.D. Edwards acquisition; when those are added in, the company will likely record a small net loss when it reports later this month.