Updated from 9:05 a.m. EDT
warned second-quarter sales and earnings will miss estimates, and laid the blame on a factor that hadn't previously been a significant drag on its business: bad publicity related to
$7.7 billion hostile takeover offer and the related antitrust trial.
The rationale, coming in a quarter when the trial made headlines but the bid itself looked dead in the water, is likely to spark debate on Wall Street, where a series of big software players have recently chalked up poor second-quarter results to anemic corporate demand.
PeopleSoft will earn a pro forma 13 cents to 15 cents a share on revenue of $655 million to $665 million in the three months to June 30, with new software license revenue coming in at $129 million to $133 million. Bottom-line earnings will be 3 cents to 5 cents a share. Analysts surveyed by Thomson First Call were expecting pro forma earnings of 21 cents a share on revenue of $689.3 million. On April 22, PeopleSoft put second-quarter license revenue at $150 million to $170 million.
The stock was down 97 cents, or 5.8%, to $15.85, piercing a 52-week floor and -- ironically, given PeopleSoft's reasoning -- leaving the shares more than $5 below Oracle's $21-a-share takeout offer. In a press release, the marketing-software giant laid out a case for taking its profit-miss to court.
"Although we have been able to meet or exceed our financial projections since Oracle launched their hostile tender offer more than a year ago, the extensive publicity of the antitrust trial during the last month of our quarter was impossible to completely overcome," PeopleSoft said. "We believe the adverse impact to our business has been substantial, with even greater impact this past month. We look forward to returning to normal business soon and recovering these damages."
The litigation-minded rhetoric, which comes as Oracle tries to circumvent Justice Department opposition to its plan in court, is in stark contrast to the tone PeopleSoft adopted in trumpeting strong first-quarter results in April. Following that report -- which came out prior to the start of the current antitrust trial -- PeopleSoft CEO Craig Conway crowed that his company "announced a growth objective for 2004 that was by far the most aggressive in the enterprise application software business, and we are delivering to that plan."
In trumpeting a stellar third quarter of 2003, Conway described the company as an "engine hitting on all cylinders," pointing to a "customer protection plan," or money-back guarantee, that the company implemented for customers who were concerned an Oracle takeover would devalue their software purchases. That program was curtailed once in 2004 but reinstated.
PeopleSoft's warning, which comes one day after
predicted a big second-quarter license-revenue miss, was hurting shares of
recovered from earlier weakness. Oracle was up 3 cents to $11.23.