10:55 ET ****** (Briefing.com)
PEOPLESOFT INC. (PSFT) 19 1/8 -6 5/8 Once a high flyer and a Wall Street darling, shares of enterprise application software provider is
having a rough time this morning as Wall Street turns less bullish on its outlook. Not that this should be much of a surprise as the company had already suggested that the market had matured. Last night, PeopleSoft reported a Q3 net of $0.17 a share, in line with Wall Street estimate. And while revenues for the period increased 61.8% to $351.3 million, ahead of Wall Street estimates, license revenues rose only 30% to $147.3 million from $113.0 million, below Wall Street forecasts of 40%. In fact, this is the main reason the stock is getting crushed this morning as the more volatile global environment has prompted corporations to become more selective with their software spending. Already, the company had cautioned this past summer about slower mainframe sales hurting results, which caused the stock to swoon in July. Hence, with increased competition from established application software makers already nipping at its heels, Wall Street is now concerned that its key licensing revenue driver may be slowing to a rate that makes it difficult to recommend the stock. After all, this revenue line used to grow by 75% or more as recently as late last year. Following last night's earnings release, several brokerage firms have downgraded the stock this morning, along with lowering earnings expectations. It seems that PeopleSoft will no longer be on the recommended list of brokerage houses until it can again prove that it can grow its licensing revenue line by at least 35% or more on a consistent level. This may not happen until the global problems dissipate.
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