PeopleSoft raced past analyst expectations in its just-ended quarter, reporting on Thursday a 12 percent increase in revenue, to US$698.8 million, and a slight uptick in revenue from software license sales.
The quarter, which ended Sept. 30, was the first for which analysts can compare PeopleSoft's results including J.D. Edwards & Co., which it bought in July 2003. PeopleSoft fell short of expectations in its last two quarters, and analysts had been expecting shaky results in the third quarter before PeopleSoft announced earlier this month that it had topped estimates. PeopleSoft said at the time it would report revenue of up to US$695 million, a result it slightly surpassed. The consensus estimate of analysts polled by Thomson First Call was for revenue of US$680.8 million.
Net income for the quarter was US$23.6 million, up from a US$7.3 million loss in last year's third quarter. Excluding a number of non-operating costs, PeopleSoft's per-share earnings were US$0.17, ahead of analysts' US$0.14 per share expectation. That figure excludes restructuring charges, some acquisition costs, costs related to Oracle Corp.'s ongoing tender offer for control of PeopleSoft, and "executive separation charges," which include PeopleSoft's costs for firing Craig Conway as its chief executive officer. PeopleSoft recorded US$5.3 million during the quarter in costs associated with Oracle -- down from the US$10.5 million it recorded last quarter -- and US$6.4 million in costs for executive separations.
While PeopleSoft's revenue grew solidly from last year's third quarter, most of the increase came from maintenance revenue, which increased from US$234.6 million to US$320.2 million. Professional services revenue dropped 5 percent, to US$217.2 million, while license fee revenue was essentially flat, with a US$1 million increase to US$161.4 million.
Since PeopleSoft's board replaced Conway with PeopleSoft founder David Duffield earlier this month, speculation has grown about whether the change indicates a softening stance toward Oracle, whose hostile takeover attempt Conway bitterly opposed. Duffield addressed that issue immediately on PeopleSoft's financial results conference call with analysts.
"It's been amusing to listen to what people think I'm going to do," Duffield said. He maintained that his goal is to revitalize PeopleSoft, not to facilitate -- or block -- a sale to Oracle.
Duffield's comments to analysts echoed those he made Monday in an e-mail message to PeopleSoft' employees, which carried the subject line, "I'm here for the long run." Duffield said in the message that he is currently shopping for a house near PeopleSoft's Pleasanton, California, headquarters.
"I didn't come back here to sell to Oracle," he wrote. "Rather, I'm here to beat Oracle in the marketplace, increase our revenues, re-energize our employees, and deliver greater long-term value to our shareholders."
Meanwhile, Oracle on Thursday issued another of its now-routine extensions on its tender offer to PeopleSoft's shareholders, this time extending the deadline to Nov. 5. Oracle held the offer at US$21 per share, for a total of US$7.7 billion; to succeed, analysts say it will need to increase its bid. As of Thursday, 19.6 million shares -- about 5 percent of PeopleSoft's outstanding total -- had been validly tendered into the offer, up from the 11.7 million shares tendered two weeks ago.