PeopleSoft rises after conference call
By Brenon Daly, CBS MarketWatch
Last Update: 4:37 PM ET Sep 4, 1998NewsWatch
PLEASANTON, CALIF. (CBS.MW) -- PeopleSoft shares rose 4.7 percent Friday
after the company's chief said in an unprecedented conference call that
business is going "exceptionally well."
During the after-market call, PeopleSoft (PSFT) reiterated its target of
increasing sales next year by 60 to 65 percent. The company's operating
margin should be between 18 to 20 percent.
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Chief executive Dave Duffield said the company has been signing key
contracts with large global companies.
Slight slowdown
PeopleSoft shares slumped to a 52-week low amid concerns that the
company's torrid growth rate is slowing.
In the most recent quarter, software sales increased 53 percent, down
from a 70 percent increase in the second quarter of 1997.
Sales of PeopleSoft software will slow to 45 - 50 percent for the third
quarter and drop to 35 percent in 1999, projects Goldman Sachs analyst
Rick Sherlund.
Total revenue, however, will be helped by PeopleSoft's emerging services
business.
Market (de)capitalization
In Friday trading, PeopleSoft stock added 1 3/8 to 30 15/16.
Robert Kugel, analyst at FAC/Equities - First Albany, rates PeopleSoft a
"buy," adding the stock has "a lot more strength that it is given credit
for." He sees shares hitting 45 inside a year.
Shares have dropped from above 50 over the past two months, erasing
about $5.8 billion in market capitalization from the company.
The decline has also taken a large chunk out of the wealth from
PeopleSoft's top executive. Chief executive Duffield has lost about
$1.15 billion as the stock has slipped.
Duffield owns about 52.5 million shares -- 23 percent of outstanding
stock -- in the company, according to The Carson Group, which keeps
track of large stock holdings.
Duffield and chief financial officer Ron Codd hosted the call. The
company doesn't hold teleconferences discussing its quarterly results.
Widespread woes
The concerns that have shelled PeopleSoft have spread to other companies
that make software to automate many business functions.
Consider that shares of both Baan (BAANF) and Oracle (ORCL) are within 2
points of their 52-week low. American Depositary Shares for SAP (SAP)
have lost nearly one-quarter of their value since listing on the NYSE
at the beginning of August.
SAP is the largest so-called enterprise resource planning software
company, with a 24.9 percent share of the market. PeopleSoft is the
second-largest company with 8.5 percent share, just ahead of Oracle's
8.4 percent, PeopleSoft said during the call.
Brenon Daly is a reporter for CBS MarketWatch.
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