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Technology Stocks : PSFT - Fiscal 1998 - Discussion for the next year -- Ignore unavailable to you. Want to Upgrade?

To: mauser96 who wrote (2655)	10/13/1998 3:12:00 PM
From: John F.	Read Replies (3) \| Respond to of 4509

The Lunchtime News -- Sep 04, 1998 Sep 04, 1998 FOOL PLATE SPECIAL An Investment Opinion by Alex Schay PeopleSoft Reaffirms Outlook PeopleSoft Inc. (Nasdaq:PSFT - news) , the number two provider of enterprise application software for business gained $2 5/16 to $31 7/8 this morning after reiterating its positive outlook for the balance of its fiscal year (and beyond) in a conference call last night. The company reaffirmed its expectation that total revenues in the third quarter will grow 60% year-over-year, and that cumulative 1998 results will see top-line growth in the range of 60-65% compared with 1997. As well, PeopleSoft forecast 1998 operating margins in the company's target range between 18-20%. Nothing new here -- it seems that PeopleSoft just wanted to clearly articulate its present business position in the wake of six months worth of inquiries regarding its operations and the enterprise resource planning (ERP) market as a whole. Systems management software has grown in tandem with the applications market. Client/server's rapid acceptance hinged on its flexibility, and as it progressed, the complexity of performing systems management tasks increased dramatically. With respect to the enterprise resource planning market as a whole, PeopleSoft cited recent forecasts made by AMR Research that ERP is set to grow at a compound average rate of 37% over the next five years, with license revenues growing 33% and service revenues set to grow by 45%. PeopleSoft's second quarter yielded some pretty sweet growth on these various fronts as revenue from services came in at $172 million, up 97% from the same period last year, while license revenue grew 53% from the prior year and maintenance revenue increased by 97% year-over-year, to $68.1 million. Investors need to decide how they want to value the services business associated with ERP companies. As the complexity mounts, ERP customers are forcing vendors to manage implementation projects and get more heavily involved on the ancillary services side of things. As many commentators have noted, the consulting engagements that are emerging from this trend are resulting in improved customer satisfaction levels and subsequently, increased follow-on product sales. The thing is, the consulting business is growing more quickly than license revenue for almost every vendor in the enterprise software business. Seeing how PeopleSoft is managing its financial software business, online transaction processing applications, and the growing opportunities it is creating in the international space (PeopleSoft 7.5 will be key), it is definitely worth a closer look for investors unafraid of untangling a segment with lofty valuations. fnews.yahoo.com