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Technology Stocks : PSFT - 1999: The "Make-It-or-Break-It" Year? -- Ignore unavailable to you. Want to Upgrade?

To: Kevin Kessel who wrote (387)	3/31/1999 8:51:00 PM
From: bob zagorin	Read Replies (1) \| Respond to of 1274

for those who don't have acrobat, here is summary "...Confirming our ERP Fears Summary PeopleSoft's near-term performance remains poor as the company struggles against a difficult pre-Y2k demand environment and sits in between product cycles until 2H 99. These challenges were confirmed by the company's announcement of a 1Q 99 shortfall. Details are lacking at this point and will not be available until April 20, when the company releases final results. The company will not be holding a conference call to discuss these preliminary results. The company announced that it expected revenues of $275 to $305 million for 1Q 99, representing flat to 10% growth with prior year and for margins to be “significantly lower than levels forecast.” This compares with our estimates of $339 million and EPS of $0.12, or operating margins of 13.9%. We anticipate that most of this weakness is on the license side, with services remaining relatively robust. We are now forecasting 1Q 99 revenues of $293 million (+5.8%) and EPS of $0.05 vs $0.13 in the prior year. We have revised our 1999 and 2000 estimates downward as well. We expect the 1H of 1999 will continue to be a struggle for PSFT and the rest of the ERP sector. Comparisons will become easier in 2H 99 and we expect the demand environment for enterprise applications will return once corporate customers roll off of Year 2000 projects. This should help PSFT's top line and we expect the company will have tied down expenses further, given the difficult operating environment. The company is maintaining a very loyal customer base and has several new, major product initiatives such as PeopleSoft 8.0, analytical applications, e-commerce platform (PeopleSoft Business Network) and new vertical offerings. While the stock has been a significant disappointment to us, we believe there is real value in this franchise that we believe can be realized over the next 12-18 months. For current holders of PSFT, we believe there will be a rebound in the stock over this period, but the near-term outlook remains gloomy...."