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Analysts sour on PeopleSoft's prospects

Pricing pressure and Oracle's takeover bid prompt two analysts to turn slightly pessimistic on PeopleSoft's outlook.

Prudential Equity Group analyst Brent Thill lowered his firm's estimates of PeopleSoft's earnings and revenue for the quarter ending March 31 and for the full year, citing Oracle's hostile takeover bid as a continuing drag on the Pleasanton, Calif., software company. While maintaining a neutral rating on the stock, Thill noted in his report: "Oracle's hostile acquisition attempt, despite facing significant antitrust roadblocks from the U.S. Department of Justice, is having a negative impact on PeopleSoft's ability to generate new business."

J.P. Morgan Securities analyst Adam Holt, who also maintains a neutral rating on PeopleSoft, said in a recent report that pricing pressure has increased during the past six to nine months and that it may miss its revenue targets for the year as a result. "We continue to believe it will be difficult for the stock to outperform even at its currently inexpensive valuation," he noted in the report.