Enterprise application vendor Peoplesoft continued its slow recovery in its most recent financial quarter, but faces a tough year as the impact of its acquisitions and new Internet based products takes hold.
After a year that Peoplesoft chief executive Craig Conway described as "unquestionably one of the toughest in our history", the company is showing signs of a sustained recovery.
Profit before non-recurring items related to restructuring and merger activity for the quarter ended 31 December 1999, was $11 million on turnover down 9.5 per cent to $372.3 million. Earnings were $0.04 per share compared with a Wall Street estimate of $0.02.
Allowing for non-recurring items pushed Peoplesoft into a net loss of $5.5 million in the quarter and $177.8 million for the year. The year was poor from an operating standpoint - $21 million profit compared with $164.1 million profit last year.
On this earnings announcement, Peoplesoft stepped away from tradition and provided a significant amount of detail about activities within each of the market sectors it serves, as well as giving important insights into its European, Middle East and African operations.
While US markets remain weak, PeopleSoft's European, Middle East and African operations are moving sharply ahead. Overall growth in the region was 42 per cent for the year, making it the fastest growing part of Peoplesoft's global operations.
The company expects to see further growth this year, and predicts that international operations will account for 35 per cent of worldwide operations by 2001 compared with the current 27 per cent.
"We have a long-term target of 40 per cent," said Alistair McGill, Peoplesoft's UK marketing director.
Conway said Vantive, a customer relationship management company that Peoplesoft bought last October, has a "strong installed base in Europe", something Peoplesoft is keen to capitalise on as it sees significant opportunities in this market.
The company has started the release cycle for the pure Internet architecture it announced last autumn. Conway believes that this will make a significant difference to Peoplesoft's ability to compete in the application service provider (ASP) market where it sees "great opportunities for mid-range companies".
Peoplesoft insiders agree, noting that while the company's main ASP partner Corio is doing a good job, it is hampered by the current client/server architecture.
"We understand the importance of this as an opportunity to make the ASP model work well," said Conway. However, the Internet architecture is unlikely to be fully available until the second half of this year.
Conway said Peoplesoft expects to make major announcements across the full spectrum of products, with an emphasis on ecommerce-style offerings over the next two quarters.
The industry reaction was mixed. "While not stellar results, Peoplesoft's year-end and fourth-quarter numbers, particularly licence revenue, show a slight return to growths," said analyst AMR Research. Steve Kohn, an analyst at Soundview Technology, which is an investment spin-off from researcher Gartner Group, said: "Peoplesoft is well positioned for a rebound."
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