Investors Eye Siebel, PeopleSoft for Corp Spending
By Lisa Baertlein
PALO ALTO, Calif. (Reuters) - When leading business software vendors Siebel Systems Inc. (Nasdaq:SEBL - news) and PeopleSoft Inc. (Nasdaq:PSFT - news) release their earnings next week, investors will be looking for one key thing: confirmation that corporate technology investment will be on the mend by midyear.
``Investors are looking to validate their thesis on a better 2002. Siebel and PeopleSoft are great barometers of the corporate spend,'' Banc of America Securities analyst Bob Austrian told Reuters.
Shares of Siebel, the No. 1 vendor of software that automates sales and customer service activities, are up more than 26 percent from the beginning of the year on the expectation that economic recovery is on the horizon.
It's a belief championed by executives at the San Mateo, California-based customer relationship management (CRM) software company and other so-called enterprise software houses, including Oracle Corp. (Nasdaq:ORCL - news) and SAP AG (SAPG.DE)(NYSE:SAP - news).
Siebel -- which was one of the last big business automation software players to stumble amid a sharp downturn in corporate software spending and increased competition from rivals SAP, Oracle and PeopleSoft -- in October said third-quarter earnings fell 48 percent but that it believed business would start improving by mid-2002.
``There's a great deal of optimism built into the stocks at the moment. I think Siebel's is deserved,'' said Austrian, who added that he's expecting a big year for the company, which is coming off a tough 2001 but likely to get a boost as sales of its newly updated CRM software hit their stride.
The company has said it expects to post earnings of 9 cents to 14 cents a share for its recently completed fourth quarter, which would fall short of the 15 cent per share profit it had in the year-earlier period.
Siebel reports its fourth-quarter earnings on Wednesday, when results also are expected from European software giant SAP.
Earlier this month, SAP said its fourth-quarter software sales came in better than expected, boosted by a friendlier U.S. sales environment and deals that had slipped from the third quarter.
ON THE OTHER HAND
Austrian said Pleasanton, California-based PeopleSoft -- which has been on a six-quarter winning streak after breaking out of the doldrums with revamped software -- could soon be telling a somewhat different story.
``PeopleSoft is coming off a banner 2001 and may have a bit more difficulty keeping its momentum,'' he said.
Nevertheless, the consensus on Wall Street is that the company's good fortune will continue -- at least in the short run.
Twenty-five analysts polled by tracking firm Thomson Financial/First Call expect PeopleSoft to post per share earnings on average of 16 cents. In the year-ago quarter the company earned 13 cents a share.
``Our best guess is that the company will be optimistic about prospects going forward but is likely to only modestly raise guidance to the Street given the tough economy and the seasonally weak nature of the first quarter,'' said Lehman Brothers analyst Neil Herman, who expects PeopleSoft to post ''solid'' fourth-quarter results on Thursday.
PeopleSoft's stock is off about 6 percent year-to-date, while shares of Siebel, Oracle and SAP are posting gains.
In a research note Jan. 17, Herman said renewed concerns about PeopleSoft's use of a permissible accounting move that enabled it to shift some of the research and development costs associated with PeopleSoft 8 -- a completely overhauled version of its software that automates accounting, human resources and selling -- to an affiliate called Momentum Business Applications had been among the factors that recently have contributed to the stock's decline.
PeopleSoft executives were not immediately available for comment.
``We believe that within the next three months PeopleSoft will announce its intention to acquire Momentum,'' Herman said.
``This potential acquisition would finally put to bed Momentum and the associated nagging accounting concerns,'' he added. |
