PeopleSoft's Q1 income plummets 77%

Facing a slump in the enterprise software market, PeopleSoft Ihas announced a 77% decline in its first-quarter operating income. After phenomenal growth in the enterprise software industry in the last few years, business applications software took a plunge late last year and early this year. The slump is largely caused by the leveling off of demand for new, Y2K-compliant application packages.

Facing a slump in the enterprise software market, PeopleSoft Ihas announced a 77% decline in its first-quarter operating income.

Excluding one-time charges, net income fell to US$7.6 million, or 3 cents per share for the quarter ended March 31, 1999, from $33.8 million, or 13 cents per share, in the first quarter of last year. Revenues for the quarter were up 10%to $305.4 million, PeopleSoft said.

The one-time write-offs consist of $176.4 million incurred by the spin-off of the company's research and development arm as Momentum Business Applications Inc. and $4.4 million in charges for staff reduction. Net loss after these charges totaled $171.5 million, or 73 cents per share for the quarter.

The bulk of PeopleSoft's revenues in the quarter -- $228.3 million came from services, while revenues from license fees totaled $76.6 million. International sales were up by 31% to $54.1 million from $41.2 million in the first quarter last year, and now account for 18%of total revenues, up from 15% of total revenues last year.

After phenomenal growth in the enterprise software industry in the last few years, business applications software took a plunge late last year and early this year, according to market researchers.

The slump is largely caused by the leveling off of demand for new application packages as businesses sought to buy new software that could properly process dates from Jan. 1, 2000, said Henry Morris, vice president of data warehousing and applications at International Data (IDC) in Framingham, Massachusetts.

However, analytical applications are a growing market, he said, and growth in this area is not affected by upgrades related to year 2000: "Companies will always try to improve their businesses."

Despite the difficult time PeopleSoft is currently facing, Morris is optimistic about the developments at Momentum, where he hopes the analytical applications endeavors will take off. His optimism is shared at PeopleSoft.

In a statement, Chief Financial Officer Alan Castino said that the enterprise software market is in a difficult period, but maintained that the company is winning business from competitors. It is also having early success in selling its analytical application suite, Enterprise Performance Management, he said.

PeopleSoft in Pleasanton, California, can be reached at +1-925-225-3000, or at http//www.peoplesoft.com.

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