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PeopleSoft Quarter Sucks

PeopleSoft Quarter Sucks

It said things had turned bad and it wasn't kidding.

PeopleSoft profits dropped nearly 70% in the second quarter, worse than the revised guidance it issued a few weeks ago.

It says it's all Oracle's fault because of the heavy press coverage given to the suit that the Justice Department brought against Oracle to knock any PeopleSoft acquisition aspirations out of its head. PeopleSoft's beleaguered CEO Craig Conway called the trial "the elephant in the room for our customers."

Like the trial - which seemed to go Oracle's way and introduced more pricing pressure after Oracle's competitive discount schedules were revealed - the PeopleSoft results play to Oracle's hand and will make PeopleSoft's continued refusal to negotiate with Oracle nigh on to impossible if the court has no objections to Oracle's $7.7 billion hostile tender offer.

Prudential said that "After fighting Oracle's hostile acquisition attempt for a year, PeopleSoft's outlook is as murky as ever." It also said "Oracle's $21 bid is beginning to look more interesting."

A legal opinion is expected by the end of August.

Total revenues squeaked in at $647 million, off 30% year-over-year and $8 million-$18 million less than the company said it would clear on July 7. License revenues came in at $130 million, towards the low end of PeopleSoft's revised range.

And how's this for scary - half the licenses only closed in the last two days of the quarter and the customers that did sign at the eleventh hour wanted an update on the trial. They also got lower ASPs and there were no deals worth over $10 million. Contracts worth $7 million-$10 million were pushed in Q3.

The business that didn't slip into Q3 or was lost to ERP giant SAP, whose own quarter - particularly its US business where it did roughly $170 million - proved strong. Pru called SAP a customer's "safe haven."

PeopleSoft's earnings were a mere $11 million, three cents a share, down from $36.5 million, or 11 cents a share, year-over-year.

PeopleSoft said it spent $17 million defending itself against the Oracle bid in Q2, that's $70 million cumulatively. It also said that it wouldn't meet its estimates for the year and that the Oracle trial had made it impossible to forecast how it would do this quarter and next, meaning it will issue no guidance.

More Stories By Maureen O'Gara

Maureen O'Gara the most read technology reporter for the past 20 years, is the Cloud Computing and Virtualization News Desk editor of SYS-CON Media. She is the publisher of famous "Billygrams" and the editor-in-chief of "Client/Server News" for more than a decade. One of the most respected technology reporters in the business, Maureen can be reached by email at maureen(at)sys-con.com or paperboy(at)g2news.com, and by phone at 516 759-7025. Twitter: @MaureenOGara

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