PeopleSoft Easily Beats Estimates

The company's early confidence was justified, as new applications led revenue and earnings past expectations.
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A day after software stalwart

Siebel Systems

(SEBL)

disappointed investors for the first time as a public company, rival

PeopleSoft

(PSFT)

easily cleared analysts' estimates.

The firm, which makes a wide range of software products used by corporations, said it saw net income of $50.3 million, or 16 cents per share, on $509 million in total revenue. Software license fees, a measure of the company's main business, were $152 million. A year ago, the company earned 8 cents per share on $443.1 million in revenue, including $131.5 million in software license fees.

For this year's third quarter, analysts were expecting earnings of 12 cents per share on $517.1 million in revenue, according to Thomson Financial/First Call. On average, analysts expected $152 million in software license fees. During regular trading, before the company reported, PeopleSoft shares gained $1.11 cents, or 4.8%, to finish at $24.30.

PeopleSoft pulled a rare feat going into the third quarter when it raised its earnings guidance to analysts for the period. Back in July, it said it expected earnings for the quarter to be 15 cents per share, a penny better than analysts had originally thought. Of course, that was before the Sept. 11 terrorist attacks on the United States, events that threw previous estimates out the window and resulted in the lower 12-cent consensus estimate.

Because software companies typically do the lion's share of their business in the closing weeks of the quarter, most analysts adjusted their earnings numbers for the firms downward after the attacks, and PeopleSoft was no exception. But the relatively smaller trimming of just 3 cents off consensus estimates reflected analysts' confidence that PeopleSoft will fare relatively better through these trying economic and geopolitical times than some other firms.

On Wednesday, for instance, Siebel Systems reported just half of the original 14 cents in earnings it originally projected for its third quarter.

PeopleSoft has benefited this year from strong demand for its new suite of PeopleSoft 8 software applications, as its customers go through the "upgrade cycle" to buy the firm's latest products. In June, the company also took the wraps of its Internet-enabled customer relationship management software, a product that's gotten positive reviews from customers and analysts.