PeopleSoft tops estimates

The company also projects a strong 2002 and announces the repurchase of its controversial subsidiary, Momentum Business Applications.

2 min read
PeopleSoft on Thursday said its fourth-quarter profit was up more than Wall Street had expected, as sales of its revamped business automation software bucked a challenging technology spending environment.

The company also projected a strong 2002 and announced the repurchase of its controversial subsidiary, Momentum Business Applications.

The Pleasanton, Calif.-based company posted net income of $57.8 million, or 18 cents per diluted share, vs. $44.2 million, or 14 cents, in the fourth quarter of 2000. Revenue rose to $528.2 million from $497.8 million.

Analysts, on average, had expected the company to earn 16 cents a share on revenue of $521.7 million, according to tracking firm First Call.

The company also announced projections for 2002. Chief Financial Officer Kevin Parker said earnings per share are expected to be 70 cents to 75 cents. First Call had been expecting earnings of 72 cents a share. Parker also said license and services revenues are expected to rise.

CEO Craig Conway added, "We were the only company to reach our original guidance for 2001." He said the company's 2002 projections are conservative, and not to assume an economic recovery in the first half of the year.

"I see hope. I see optimism, and I see anticipation," he said. "But I don't see companies that are confident enough in a recovery that they're willing to actually spend more."

PeopleSoft said the acquisition of Momentum Business Applications will be completed by the end of this quarter. The company's projections for 2002 include the repurchase of Momentum for about $90 million in cash.

PeopleSoft's stock has been bogged down in recent weeks by concern about its contentious accounting issues with Momentum, a spinoff company of one employee that it used to fund research and development--a practice that was legitimate at the time but is no longer allowed. It was widely expected the company would repurchase its subsidiary, as its royalty payments to the company would soon exceed the repurchase price.

Conway defended PeopleSoft's accounting practices on the conference call. "I was not CEO of Peoplesoft when Momentum was spun out, but if I had been here, I would have done exactly the same thing," Conway said.

PeopleSoft competes with software industry giants SAP, Oracle and Siebel Systems.

Reuters contributed to this report.