PeopleSoft’s recent financial results do not mean that the merger with JD Edwards has been pulled off, warns analyst firm Gartner Group.
The company’s third quarter results announced in late October showed that, excluding the impact of purchase accounting from the company's acquisition of JD Edwards, PeopleSoft posted a profit of $0.17 per share, six cents above analyst expectations. With costs of the J.D. Edwards acquisition included, PeopleSoft posted a net loss of 2 cents per share.
The company immediately claimed that the merger had been a success. "JD Edwards has been more than we could have expected," said CEO Craig Conway said. "A number of theoretical advantages of combining the company with J.D. Edwards are actually showing quantifiable results. It's one thing to talk about cross-selling and up-selling opportunities; it's another to actually see a number of cross-selling and up-selling opportunities in the first sixty days."
But Gartner has warned prospective and existing customers to look beyond the immediate results and added that there are problems ahead. “Once integration is complete, the combined company must set a course to deliver revenue it would not have achieved as separate entities,” it warns in a research note to clients. “This work has just begun. Therefore, customers should look to future quarters and to PeopleSoft's success upselling and cross-selling products across the combined customer base as well as bringing in new accounts that would not have come its way without the acquisition.”
Gartner identifies two main hurdles to achieving these revenue goals - making the product road map real and creating an effective combined sales organisation. Gartner argues: “Customers should measure strategies against the PeopleSoft product and technology road map. Each buying situation will be different, but Gartner continues to advise customers to reference each other and Gartner often to ensure that they understand the long-term effects of decisions and make adequate planning for changes.”