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Montgomery Tech Week: E*Trade Won't Eat Crow

The online broker dismisses concerns about its site's crash. Also, more insight into Oracle and hard facts about PeopleSoft.
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SAN FRANCISCO -- You gotta feel bad for a guy like E*Tradeundefined CFO Leonard Purkis. He was all set to give a bullish presentation with E*Trade's stock up near its all-time high -- and then his site crashes for 90 minutes that very morning.

Purkis was all ready to boast of the company's $100 million-$150 million marketing campaign -- and now, investors must be wondering how much of that was destroyed by

the news of the outage.

Poor Purkis stuttered and stammered through his canned presentation when talking about the quality of E*Trade's site. He added: "Unfortunately we had a problem that inconvenienced our customers. The impact was specific to our trading functionality. Our customers continued to be able to access other parts of our site, including news and charts. In addition E*Trade brokers continued to take orders on the phone."

It was clear that the media reports of the crash pained him. "It's really not about capacity and not about volume and not about a power outage," said Purkis. "It was just a software problem. It's embarrassing and it's fixed and reminds us to continue to focus on our customers and keeping them informed."

One can only imagine how "informed" desperate online traders were when they couldn't get the "E" part of the "trade." After the presentation, Purkis snuck out the back service entrance, but a


reporter tagged along.

While brushing by Ritz Carlton Hotel workers busing dishes and moving furniture, Purkis said the company will not make any extraordinary efforts to make good on trades that couldn't be completed Wednesday. "We look at this like any other trading day," says Purkis. "There will be no special effort to compensate our customers."


Cory Johnson

Did Oracle Speak Too Soon?



(ORCL) - Get Free Report

CEO Larry Ellison was overheard here saying Oracle's applications sales would

grow 40% during the next several quarters, the stock rallied.

Credit Suisse First Boston

analyst Wendell Laidley arranged a one-one-meeting with Oracle's CFO to check up on business.

Turns out that business does indeed look strong, but Ellison may have gotten ahead of himself.

After talking to Oracle CFO Jeff Henley, Laidley wrote in a report Wednesday morning: "Oracle's domestic pipeline has increased dramatically with the Q3:FY99 application pipeline doubling over the prior quarter." CS First Boston, which hasn't underwritten any Oracle offerings, raised its 12-month price target to 67 from 45. Oracle's stock rose 3% Wednesday to 60 3/4.

But Laidley still predicts year-over-year license revenue growth of 20%, 28% and 30% in the February, May and August quarters, respectively. Not bad, considering that Oracle's applications growth started to show life only in the second quarter of fiscal 1999 when it reported a surprising 19% gain from the year before. But they're still not quite the 40% Ellison predicted.

No wonder Ellison said he'd deny having ever offered the 40% target.


Cory Johnson

The Hard Reality About PeopleSoft

Kevin Landis came out of



breakout presentation looking awfully glum.

The manager of the


FirstHand Leaders Fund is long Peoplesoft, and hurting. The software company is offering little to nourish

sanguine hopes that some investors hold out for its outlook.

"PeopleSoft," says Landis, "is not pumping up expectations for this year -- and you should normally pay attention when a company is not pumping up expectations for this year."


Medora Lee