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February 4, 2000
Web posted at: 11:44 a.m. EDT (1144 GMT)

by Clare Haney

(IDG) -- U.S. ERP (enterprise resource planning) software vendor PeopleSoft is likely to be extremely busy over the coming 90 days with launch upon launch of new software and services planned, according to the company's head.

The announcements will embrace front-office applications, business-to-business, e-commerce software, and CRM (customer relationship management) products, according to PeopleSoft CEO and President Craig Conway. He was speaking on a conference call held on Tuesday concerning the release of the company's fourth-quarter financial results, which slightly bested analysts' expectations.

In the course of the next three months, the ERP software vendor will release PeopleSoft 8.0 commercial applications, make a major announcement on e-procurement, offer a professional service automation product and an employee enterprise portal, and also plunge into the ASP (application service provider) business, Conway said. Some of the product offerings will be aimed at attracting new business, while others will be positioned as add-on software targeted at existing PeopleSoft customers, he said.

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Earlier this month, PeopleSoft took the wraps off its PeopleTools 8.0 development tool suite that allows the company's applications to work fully over the Internet. The vendor's Enterprise Performance Management application is the first product to include PeopleTools 8, with other applications to follow in the second quarter of this year, Conway said.

PeopleSoft 8.0 applications will contain a "100-percent Net architecture," Conway said. The company has reworked the presentation of the applications for the Internet so that they will "feel, look, and smell like high-end HTML applications," PeopleSoft executives said.

Turning to the company's planned move into the ASP arena, PeopleSoft hired Oracle's chief ASP architect in October of last year to design the initiative, which should go live over the next two weeks, Conway said.

PeopleSoft is not planning to offer its ASP service on a subscription basis that spreads the cost of the licensing over several years, Conway said. Eleven ASPs will provide PeopleSoft applications on their Web sites, he added. "We see ASP as a huge opportunity to greater penetrate the midmarket," Conway said, explaining that only 20 percent of PeopleSoft's current business comes from that sector.

Turning to PeopleSoft's fourth-quarter results for fiscal 1999, Conway proffered two opinions. He welcomed the results as being "significantly improved," but added that "we're happy to have 1999 behind us."

The company's results include those of CRM specialist Vantive, which PeopleSoft announced it would purchase for $433 million in October of last year.

For the three-month period ended Dec. 31, 1999, PeopleSoft reported net income of $11.1 million, or 4 cents per share, on revenue of $372.3 million. All three numbers were substantially down on the figures recorded for the fourth quarter of fiscal 1998 when net income was $42.3 million, or 15 cents per share, on revenue of $411.3 million. A group of 16 analysts polled by First Call/Thomson Financial predicted earnings per share of 2 cents for the fourth quarter of 1999.

The net income figure of $11.1 million bettered PeopleSoft's own estimates made earlier this year that operating profit would lie somewhere in the region of $4.8 million and $9.6 million.

However, once nonrecurring items related to the Vantive acquisition and the purchase of Intrepid Systems were factored into the mix for PeopleSoft's fourth-quarter fiscal 1999 results, the ERP software vendor ended up with a net loss of $5.6 million, or a loss of 2 cents per share.

PeopleSoft's international business accounted for 27 percent of total revenue, up from 21 percent in the third quarter of fiscal 1999. Every international region experienced strong sequential growth, with Europe and Japan recording the largest amount of growth, said Steve Hill, vice president of finance and acting chief financial officer at PeopleSoft.

For fiscal 1999 as a whole, PeopleSoft reported net income of $21 million, or 8 cents per share, on revenue of $1.4 billion compared with fiscal 1998's net income of $164.1 million, or 58 cents per share, on revenue of $1.5 billion. A group of 15 analysts polled by First Call/Thomson Financial predicted earnings per share of 9 cents for the entire fiscal year of 1999.

Again, once nonrecurring items were included in the results, PeopleSoft reported a net loss for fiscal 1999 of $177.8 million, or a loss of 67 cents per share.

Conway said the fact that the license volume rose across every PeopleSoft product was proof that the e-business software market is in general recovery. There was no question that 1999 would be a difficult year, he said. "We knew a year ago that we'd be impacted by Y2K."

The ERP software market stagnated somewhat last year as users delayed purchasing decisions due to fears concerning the possible impact of the year-2000 data changeover problem. "We're cautiously optimistic now that Y2K is behind us," Hill said.

Looking ahead, "we're generally upbeat about [fiscal] 2000," Conway said, again stressing the number of products PeopleSoft is looking to roll out shortly and adding that the vendor has tripled the size of its marketing budget.

Both Conway and Hill kept reiterating the health of the company. Last year saw PeopleSoft make its first layoffs amid some senior management upheaval, leading some analysts to suggest that the company had lost its way.

"We have one of the healthiest balance sheets in the industry with more than $1 billion in cash resources available," Hill said. "We're financially strong and able to invest." He added that PeopleSoft is currently spending more than 25 percent of its total revenue on product development as opposed to the estimated 10 percent ERP rival Oracle expends.