Peoplesoft has reported second quarter revenue to 30 June totalling $312 million, down three per cent on the same period last year but net income collapsed from $39.2 million to $2.9 million.
Peoplesoft's results, in marked contrast to those reported earlier by SAP (see earlier story), show that for the six months to date and excluding the effects of the Momentum spin off in Q1, Peoplesoft is showing net income to date of $12.8 million compared with $73 million, despite an overall increase in revenue to date of three per cent.
In the analyst conference call, Peoplesoft president Craig Conway said the effect of Year 2000 remained an important factor but was not the only one.
"There's no question that large companies in July 1999 will not wish to go into new backbone projects at this time, but there is increased competition - it's a buyer's market," he said.
Al Castino, Peoplesoft's chief financial officer said the company was not prepared to make a formal outlook statement.
"We feel that pipeline visibility beyond the next three months is very limited," he said, adding, "We anticipate that after the first of the Year (2000), the applications market will return to some state of normalcy, but are unsure what that will be."
Although Peoplesoft has not slipped into an operational loss, licence revenue, which produces margins of around 85 per cent, has collapsed from $148.5 million to $57.9 million in the last quarter.
Service revenue has compensated significantly, rising by 44 per cent, but more importantly, the margin generated has improved from around 43 per cent to 50 per cent.
However, it is clear that existing customers are not seeing enough in new functionality to tempt them into buying existing products. Peoplesoft said two thirds of its licence revenue came from new customers.
The company hopes to improve the position through its ebusiness efforts, starting with e-procurement and e-store, products that were announced in the last quarter.
According to Conway, the global sales force is going through training on these products, a process that will be completed in the next couple of weeks. E-Procurement is being jointly marketed, sold and developed with Commerce One.
Mike Joy, vice president of development, said Peoplesoft is well advanced in technical development for release 8, due in the second quarter of next year.
"We have already announced community type products delivered through the portal - we're now looking to provide integration over the Internet so that users get content, transactions and analytical applications based on their role," he said.
Despite the gloomy news, Conway stressed that Peoplesoft is in excellent financial shape. Referring to his time at Oracle in the early 1990's, he said, "I've been through far more challenging times - this company has a ton of cash and a great reputation."
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