PeopleSoft Offered Customers Rebates Amid Oracle Bid
Wednesday July 2, 1:52 pm ET
By Marcelo Prince
NEW YORK -- PeopleSoft Inc. (NasdaqNM:PSFT - News) introduced a money-back guarantee program last month to entice customers to move ahead with purchases despite the uncertainty caused by Oracle Corp.'s attempted takeover, executives said Wednesday.
It promised customers a payment of two to five times their software license fee in the event that a company acquires PeopleSoft and discontinues support or development of its products within a specified amount of time, a PeopleSoft executive said on a teleconference.
The customer-assurance program was a component in "more than half" of the company's June-quarter license deals, said Kevin Parker, PeopleSoft's chief financial officer. Any payment would be the responsibility of an acquirer, not PeopleSoft, he added.
Earlier Wednesday, PeopleSoft surprised Wall Street when it said second- quarter earnings and revenue would exceed its original forecasts. Analysts feared the uncertainty caused by Oracle's offer would cause customers to postpone purchases.
The program was fashioned to "defend and support" customers deciding whether to move ahead with transactions, Mr. Parker said. The offer expired on June 30, but Mr. Parker said PeopleSoft may decide to extend a similar protection in the current quarter.
Oracle announced plans for a hostile takeover on June 6 and said it would stop selling and developing PeopleSoft's products and urge customers to switch to Oracle software. Oracle has since eased its stance, vowing to provide support for 10 years and promising not to force customer to switch vendors.
PeopleSoft executives acknowledged the takeover battle with Oracle disrupted its business and caused some customers to delay purchases or buy software from a competitor. The company has spent more than $10 million to defend itself against Oracle, they said.
Although PeopleSoft introduced a money-back guarantee last month, Mr. Parker said the company didn't engage in "extraordinary discounting or lengthening of payment terms" to close deals.
The company signed 30 transactions worth between $1 million and $10 million in the June quarter, executives said. That's twice as many as it signed in the March quarter, but flat from the year-earlier period.
Craig Conway, PeopleSoft's chief executive, described the quarterly results as an "undeniable vote of confidence" from new and existing customers.
PeopleSoft expects second-quarter services and maintenance revenue of $375 million to $395 million with maintenance revenue up sequentially and professional services revenue flat from the March quarter.
-By Marcelo Prince; Dow Jones Newswires; 201-938-5244 |
