PeopleSoft, the last of the major enterprise application software companies to report its second quarter financials, has turned in a set of figures that were not as bad as Wall Street had feared, but which still saw profits decline by almost a quarter.
The company earned $36.02 million, down 24 percent from $47.4 million a year ago on revenues of $482.2 million, compared with $544.5 million in the second quarter of 2001. In the wake of disasterous figures from SAP, Oracle and Siebel, Wall Street seemed relieved at the limited scale of PeopleSoft’s decline, sending its shares up 9 per cent in after hours trading.
Analysts reckon that PeopleSoft has benefited from having a product line that is spread over multiple functional areas rather than being dependent on a single core competency.
"We're seeing an unprecedented combination of factors," said CEO Craig Conway. "The weak economy, concerns about homeland security and accounting issues on Wall Street have made a sustainable recovery difficult,”
The bad news was that software licence fees, which market watchers typically take as a key performance indicator, fell 20 pe rcent to $131.9 million. The company also took an $8.7 million charge relating to the buy-back of Momentum Business Applications amid post-Enron concerns about the nature of the business which PeopleSoft had created as a perfectly legal accounting sleight of hand.
Meanwhile IBM – once the bellweather for the entire technology sector – saw second quarter net income from continuing operations of$56 million, compared with $2 billion in profit in the second quarter of 2001.
"Customers are giving orders a thorough review before signing," said Chief Financial Officer John Joyce. "Their focus remains on fast payback on investment. Europe has weakened, but the U.S. has shown a little better progress." in growing out of the technology recession.
Global services - which handles applications integration and partners with multiple apps vendors – generated $8.7 billion, enough to make it the company's main business driver at 44 per cent of total sales, a slip of about 1 percent year-over-year. But software was the only division that produced gains in sales during the quarter, rising 7 per cent to $3.3 billion compared to the year before and up 8 per cent from the first quarter.