PeopleSoft Posts Profit Amid Oracle Takeover Battle

PeopleSoft Inc. (PSFT) Thursday reported a quarterly net profit, after a year-earlier loss, as the company saw stronger sales of its business software than what it had forecast earlier despite its continued fight to block a takeover from rival Oracle Corp. (ORCL).

Pleasanton, Calif.-based PeopleSoft, reported third-quarter net income of $24 million, or 6 cents per share, compared with a loss of $7.3 million, or 2 cents a share, a year earlier when it took charges related to its purchase of software maker J.D. Edwards.

Analysts say problems still linger for many software makers, including weak pricing power and a more disciplined spending environment by customers.

PeopleSoft, which fired former CEO Craig Conway (search) earlier this month amid a loss in the board's confidence in his ability to lead the company, reported third quarter revenue of $699 million and earnings per share, excluding items, of 17 cents.

On that basis, analysts polled by Reuters Estimates were expecting PeopleSoft, which makes software that helps companies run and automate business processes such as finances and payroll, to report earnings per share of about 14 cents on revenue of $686.9 million.

PeopleSoft had raised its third quarter revenue forecast earlier this month to a range of $680 million and $695 million.

Some analysts were pleased with the company's earnings, but wanted to hear more from the company later Thursday when PeopleSoft executives speak with analysts.

"The (earnings report) looks pretty good overall. Revenue came in higher and maintenance revenue also saw an uptick," said Piper Jaffray analyst Tad Piper, who does not own PeopleSoft or Oracle stock.

PeopleSoft, which warned in July it was unlikely to meet its full-year 2004 earnings estimates due to the uncertainty caused by the Oracle takeover offer, said license revenues were $161 million in the quarter.

The company had forecast license revenues, a barometer of future growth, between $155 million and $166 million.

PeopleSoft has said in the past that the takeover has hurt demand for its business software because of customer fears that PeopleSoft's products might not be adequately supported and updated by Oracle.

Oracle's $7.7 billion hostile takeover offer got U.S. court approval in September after a judge rejected the Justice Department's (search) antitrust concerns.

European Union antitrust regulators have yet to make a final ruling on Oracle's proposed takeover, which could result in up to 10,000 job cuts at PeopleSoft.

PeopleSoft shares traded down after hours to $20.38 after closing Thursday on the Nasdaq at $20.43, below Oracle's all-cash tender offer price of $21 per share. The 52-week low of PeopleSoft's stock is $15.39.