Build Not Sell PeopleSoft CEO Says as Revenue Bounces Back

PeopleSoft officials are upbeat about an 8 percent increase over the disappointing results the company reported in the previous quarter. CEO Dave Duffield asserts he has returned to build the company, not to sell it.

PeopleSoft Inc. reported that its revenue and earnings bounced back in the third quarter following the disappointing results of the previous quarter, as founder and CEO Dave Duffield asserted he has returned to build the company, not to sell it.

Duffield led off the quarterly earnings call by saying it has been "amusing" to hear the speculation about what he plans to do since he replaced fired CEO Craig Conway.

"Some people have speculated that Im here to sell the company to Oracle. Others are guessing Im here to block a sale. Both are wrong," Duffield said. "Im here to make sure our company achieves its full potential—something that absolutely enhances value to our shareholders."

/zimages/3/28571.gifClick here to read an analysis of PeopleSofts rehiring of Duffield.

PeopleSofts shareholders and customers have been looking for the company to post strong numbers as a sign that that revenue growth will provide the financial strength the company needs to fend off the hostile buyout bid from Oracle Corp.

For the third quarter PeopleSoft reported record revenue of $699 million, an increase of 8 percent consecutively, and a 12 percent increase from the year earlier quarter. In the previous quarter, PeopleSoft reported total revenue of $647 million, which was below the companys preliminary revenue estimate of $655 million and $665 million.

Pro-forma net income totaled $62 million, which was an increase of 22 percent over the prior quarter. Net income reported under GAAP (Generally Accepted Accounting Practices) totaled $24 million, and earnings per share were double that of the previous year.

The companys revenue and profits were bolstered by major new sales posted during the quarter, said Kevin Parker, co-president and chief financial officer.

"We recorded 31 deals greater than $1 million in the quarter, with one deal in excess of $10 million," Parker said. "This is the most $1-million-plus deals we have posted in almost a year" and was a "clear indication" that customer demand for PeopleSoft ERP (enterprise resource planning) software remains strong, he said.

"Our business remains sound and very profitable as we effectively managed our expenses and significantly improved our bottom line performance for Q2," Parker said.

The company also closed deals with more than 135 new customers, he said. The largest deal that the company announced was for $10 million with the Mexicos Tax Administration Service.

However, new customer license revenue as a percentage of total license revenue actually declined, mainly because PeopleSoft wont start to realize significant license revenue from the Mexico Tax Administration until 2005, Parker said.

The Mexican contract also boosted the average selling price for license deals in the quarter to $760,000, up from $346,000 in Q2. Without the Mexican contract, the average selling price was $379,000, a 10 percent increase over Q2.

PeopleSoft officials also confirmed that Duffield circulated a memo to employees asserting that he "didnt come back here to sell to Oracle."

"Rather, Im here to beat Oracle in the marketplace, increase our revenues, re-energize our employees, and deliver greater long-term value to our shareholders," the memo said.

/zimages/3/28571.gifRead here about whether a deal with partner IBM could stall Oracles advance on a takeover.

PeopleSoft would maintain its independence by growing sales and revenue and offering great customer service, he said.

Meanwhile Oracle extended its $7.7 billion offer for all outstanding PeopleSoft shares through Nov. 5. Its previous $21-per-share offer was scheduled to expire on Oct. 22.

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John Pallatto

John Pallatto

John Pallatto has been editor in chief of QuinStreet Inc.'s since October 2012. He has more than 40 years of experience as a professional journalist working at a daily newspaper and...