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PeopleSoft tops estimates; launching ASP division

The enterprise resource planning company surpasses Wall Street for its fourth-quarter earnings, though it posted a net loss and revenue dropped 9.5 percent.

PeopleSoft today beat average Wall Street estimates for its fourth-quarter earnings, though it posted a net loss and revenue dropped 9.5 percent.

Separately, the Pleasanton, Calif.-based company said it intends to announce a new application service provider (ASP) business within three weeks.

PeopleSoft, which makes enterprise resource planning (ERP) software, reported a $5.57 million loss, or 2 cents a share, compared with net income of $27.2 million, or 11 cents a share, a year ago.

Excluding acquisition costs for last year's purchase of Vantive, however, the company said it earned 4 cents a share, beating Wall Street estimates of 2 cents, according to First Call.

Sales dropped 9.5 percent to $372.3 million from $411.3 million.

At the close of regular trading at 1 p.m. PST, PeopleSoft's stock finished at $26.06 a share, up 15.83 percent. The company released its results after the market's close.

PeopleSoft CEO Craig Conway said results are a sign that the ERP market is bouncing back after the hammering it took last year, which Conway blamed on a slowdown in software purchasing as companies waited for Y2K to pass. PeopleSoft competes with SAP, Oracle and Baan.

"We think that this really signaled a return in the market," Conway said in an interview. "We were relieved to see '99 end."

The company's results included sales from Vantive, which makes software that automates customer sales and service needs. PeopleSoft bought Vantive in December.

Vantive's customer relationship management (CRM) business increased 68 percent for the quarter, while PeopleSoft's software sales increased 37 percent over last quarter, Conway said. About half of the company's license sales for the quarter came from new customers, he said.

Additionally, Conway touched on PeopleSoft's forthcoming ASP business, under which it will rent and manage software for its customers. PeopleSoft already has ASP partnerships with about 11 companies, he said. The company also has invested $10 million in Corio, an ASP which focuses on deals with dot-coms.

Conway said PeopleSoft will focus on the middle market with its new business--and for now plans to keep the ASP unit inside of the company instead of establishing a new entity as Oracle has done with its ASP division, Oracle Business OnLine.