One suit, filed Friday by the firm Weiss & Yourman, said PeopleSoft violated federal law between February 4, 1997 and January 28, 1999, by issuing "false and misleading statements" about its financial results.
The lawfirm Faruqi & Faruqi also filed a similar class-action suit against PeopleSoft executives and directors Friday in U.S. District Court in California alleging the Pleasanton, California-based company violated sections of the Securities Exchange act of 1934.
PeopleSoft could not be reached for comment this morning.
In the Faruqi suit, shareholders allege, among other things, that PeopleSoft's financial statements reflected "improper accounting for research and development costs in connection with certain acquisitions." As a result, PeopleSoft's stock price was inflated from February 4, 1997 through January 28, 1999, the suit states.
PeopleSoft is currently under financial pressure after announcing poor financial results last week. The company posted earnings per share of 16 cents for the quarter, excluding acquisition charges, that were flat compared with last year's results and a penny below the First Call estimate. The company said it is restructuring to compete better globally by eliminating 430 jobs, or 6 percent of its workforce. Shares of PeopleStock's stock plummeted 12 percent Friday.
Downgrading their ratings on PeopleSoft Friday were Bear Stearns (to neutral from buy) and BancBoston Robertson Stephens (to market perform from long-term attractive buy).
Overall, PeopleSoft is increasingly depending on its services to boost its revenues. While licensing fee revenues grew just 3 percent from a year ago, far short of the 12 percent analysts were expecting, the company's services revenues increased 82 percent. Overall, services were 61 percent of the company's total revenue for the quarter, compared to 46 percent of total revenues last year.
The company's stock was trading at $19.25 a share this morning, down 56 cents, and down from a 52-week high of $57.43.