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Applications

Without J.D. Edwards, PeopleSoft lagged in 2003

Excluding revenue gained from a large acquisition, PeopleSoft's software license revenue declined by more than 20 percent last year compared with 2002.

Excluding revenue gained from a large acquisition, PeopleSoft's software license revenue declined by more than 20 percent last year compared with 2002, the company has disclosed in a regulatory filing.

The revelation supports rival Oracle's claims that PeopleSoft's sales have declined more sharply than those of its other competitors. Oracle is pursuing a hostile $9.4 billion acquisition of PeopleSoft and now faces a court battle to prove the proposed merger would not harm competition, as federal regulators have charged.

With last week's filing, PeopleSoft reported for the first time that its purchase last year of J.D. Edwards contributed $114.9 million in license fees to its 2003 revenue. Previously, the company had lumped revenue from J.D. Edwards and the rest of its software business together, obscuring the financial picture of the separate units.

License fees at Oracle and SAP, PeopleSoft's two closest competitors, also declined in 2003, but not as much. SAP's license revenue declined 6 percent in 2003. Oracle, which ends its fiscal year on May 31, reported a 14 percent slide in application license fees in 2003. But in the six months of June through December, Oracle's applications license revenue grew by 11 percent.

In the enterprise software industry, license fees indicate how well a company's core products are selling, and they are regarded among Wall Street analysts as a key indicator of financial health.

PeopleSoft completed its purchase of J.D. Edwards on July 18. The acquisition helped the Pleasanton, Calif.-based company leapfrog Oracle to become the No. 2 business applications company in the world behind Germany's SAP.

PeopleSoft blames the drop in 2003 license revenue on disruptions caused by the U.S.-led invasion of Iraq last year and slack software spending by government agencies, a traditional stronghold for the company. PeopleSoft executive have also blamed Oracle for falling sales, claiming that the hostile bid has scared away some potential customers.