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PeopleSoft reports near-miss first quarter

The company's $62 million profit is just below the consensus estimate released by Thomson First Call. Investor scrutiny is inevitable in the face of Oracle's hostile tender offer.

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PeopleSoft's first-quarter earnings, reported Thursday, came in slightly below Wall Street expectations, though a major acquisition helped the company grow revenue and pro forma profits.

The maker of corporate software booked a $62 million profit, or 17 cents a share, excluding special charges--a penny less than predicted by analysts polled by Thomson First Call. Including special charges, the company made a $24 million profit, or 7 cents a share.

PeopleSoft booked revenue of $643 million, which exceeded the range of its guidance but was just shy of First Call's $645.79 million consensus estimate. The company's shares fell by 61 cents in after-hours trading to $18.28.

Compared with the same quarter last year, PeopleSoft's revenue climbed 40 percent, reflecting the addition of J.D. Edwards, the software company PeopleSoft acquired in the second half of last year. Software license revenue, a key barometer of growth, shot up 62 percent to $131 million.

Net income fell 58 percent, compared to the year-ago quarter. Excluding certain charges, such as costs related to the purchase of J.D. Edwards, it rose by 62 percent.

The company blamed lower-than-expected results on a handful of contracts customers delayed signing. The customers--six of which bought products the company gained last year in the acquisition of J.D. Edwards and one that bought core PeopleSoft programs--all finalized those deals after the first quarter ended, executives said on an earnings call.

"Either of those would have moved our license revenue to the upper end" of our guidance, PeopleSoft Chief Executive Craig Conway said.

Conway also said Oracle's $9.4 million hostile buyout bid for the company proved to be a management distraction during the quarter. The company has been unable to put the threat behind it, as Oracle fights the U.S. Department of Justice's decision to block the takeover, and antitrust investigation in Europe continues. "We don't have the use of both arms," Conway said of the ongoing drama.

PeopleSoft's earnings are likely to come under intense investor scrutiny, as the company refuses a $26-a-share cash buyout offer from rival Oracle. Oracle is going to court to defend the hostile bid, which U.S. antitrust regulators blocked in February.

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