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PeopleSoft spins off R&D unit

The new company, Momentum, will focus on quickly developing technology for such hot areas as e-commerce, analytic applications, and industry-specific applications.

PeopleSoft gathered some momentum today by spinning off its research and development arm.

Called Momentum Business Applications, the new company will focus on quickly developing technology for such hot areas as e-commerce, analytic applications, and industry-specific applications.

As a result of the split, all of Momentum's Class A Common Stock will be distributed to Peoplesoft's shareholders. Stockholders will receive one Momentum Class A share for every 50 shares of PeopleSoft common owned stock. PeopleSoft, which contributed $250 million to Momentum's public venture, expects the new company's shares to trade under the symbol MMTM on the Nasdaq stock market.

The move should help Peoplesoft financially by allowing the company to unload its expensive R&D costs from its accounting books. Also, Momentum could help the Pleasanton, California-based firm better compete with rivals like SAP and Oracle on major technology fronts by infusing additional entrepreneurial energy into PeopleSoft's research and development. Yet analysts say Peoplesoft will need to manage competition between its own internal R&D organization and that of Momentum's.

Ron Codd, PeopleSoft's current CFO, has been named CEO of Momentum.

Codd joined PeopleSoft in 1991, as its CFO. As Momentum's CEO, he will be responsible for managing the company's operations, including all development initiatives. Under PeopleSoft's agreement with Momentum, the company has exclusive licensing rights to all products developed by Momentum, and an option to puchase all the company's shares.

Alfred J. Castino will replace Codd as CFO. Castino joined PeopleSoft in 1997 as VP of finance and corporate controller, most recently holding the post of senior vice president of administration and finance. With his new role, he adds investor relations to his current with responsibilities, which include finance, legal, human resources, information systems, and facilities.

PeopleSoft's shares were trading this morning at 18.25 a share, down 0.25.