PeopleSoft searching for new president

The once high-flying applications vendor is searching for a new president, athough PeopleSoft founder and current president Dave Duffield does plan to stay on as chief executive officer and board chairman.

Duffield, 58, founded Pleasanton, California-based PeopleSoft in 1987, and shepherded the company to a leading slot in the competitive Enterprise Resource Planning (ERP) software market.

But faced with increasing competition from rivals SAP and Oracle and disappointing fourth quarter results, the company in January said it will lay of 430 people.

In the past 12 months, PeopleSoft's stock price plummeted from a 52-week high of $57.44 to a low of $16.50. Shares of the company's stock were trading at $18.31 this morning.

PeopleSoft's search for a new president has been in the works for months, said PeopleSoft spokesman Andrew McCarthy.

"This is something that's been going on since last year," said McCarthy. "It isn't really anything new."

McCarthy wouldn't comment on how many candidates the company has interviewed for the job, or whether they are close to hiring.

"I think there's a recognition that it will be a tougher operating environment in ERP," said Ed McCabe, an analyst at CIBC Oppenheimer. "I think they need someone who has a history of managing in a very tough, competitive environment."

PeopleSoft, which is expected to compete neck-and-neck with Oracle this year in a battle for the No. 2 slot in the business software market, needs both Duffield's vision and a tough day-to-day leader to execute under pressure, McCabe said.

However, investors and Wall Street analysts will likely shrug their shoulders at Duffield's decision to step down as president, said Rob Kugel, analyst at First Albany.

"My read on this is that he wants to take less of an active day-to-day role," Kugel said. "It's not as fun as it used to be, so let someone else do the day-to-day work."

Yet Duffield will remain an "absolutely vital" part of the company, he said.

The search for a new president is the latest in a management shuffle at PeopleSoft, which employs 6,600 people and reported 1998 revenues of $1.3 billion.

After nine years at PeopleSoft, Al Duffield, Dave Duffield's brother, said last week he will step down as senior vice president of field operations and retire from the company later this year. Howard Gwin, who has been PeopleSoft's head of international sales, will take over the top sales spot.

In December, Ronald Codd left his position as PeopleSoft's chief financial officer to take over as CEO of Momentum Business Applications, a software research and development company spun off from PeopleSoft. Al Castino replaced him.

Like other players in the ERP market, PeopleSoft, which makes software to automate a company's accounting, financial and other functions, has struggled with declining growth in the market that analysts say is caused partly by a delay in IT spending by companies preoccupied with Year 2000 fixes, as well as some market saturation.

Overall growth in the ERP market has declined from a high of about 50 percent in late 1997 to an expected 25 to 30 percent growth this year.

"Everybody in this part of the market is struggling with changed expectations," Kugel said. "How is anybody going to get used to PeopleSoft only growing 25 to 30 percent -- the irony being that 25 to 30 percent growth by any objective is attractive or well above average. But compared to what folks are used to it's never going to be the same."