PeopleSoft Plot Thickens

PeopleSoft Inc.s (Nasdaq: PSFT) touch-and-go efforts to fend off a predatory Oracle Corp. received a boost last night as the company unveiled a healthy set of third-quarter results (see PeopleSoft Reports Q3 )

Oracle’s hostile takeover bid for the software vendor has turned into something of a soap opera, complete with courtroom drama and boardroom machinations (see Oracle Battles With PeopleSoft and PeopleSoft Suffers Crisis of Confidence).

But last night’s results suggest that PeopleSoft is far healthier than many industry observers anticipated. The vendor announced quarterly revenues of $699 million, a company record, up from $624 million in the same period last year. Revenue was also 8 percent up on the previous quarter, topping analysts' estimates of $680 million.

Pro forma earnings per share came in at 17 cents, higher than analyst estimates of 14 cents. License revenues, which have been a source of concern for many software vendors recently, were $161.4 million, up slightly from $160.5 million a year ago and 24 percent higher than the previous quarter.

These results will go some way to reassuring shareholders about PeopleSoft’s viability at a time when Oracle appears to be closing in on its target. Last month a U.S. District Court judge removed one of the major obstacles in the takeover’s path, and reports suggest that the E.U. is likely to give the deal a green light (see Oracle Prevails in Antitrust Lawsuit).But the results are not what Oracle will have wanted -- a weak PeopleSoft would drive down the company’s price. Oracle is currently offering $21 a share for its rival.

If Oracle CEO Larry Ellison was hoping for a swift consummation of his takeover bid, then he will be disappointed. Although PeopleSoft execs on last night’s conference call bobbed and weaved when analysts pressed them about the specifics of the Oracle bid, recently installed CEO Dave Duffield hinted at the company’s long-term strategy.

”Some people speculated that I am here to sell the company to Oracle; others are guessing that I’m here to block a sale -- both are wrong,” he said. “I am here to make sure that our company achieves its full potential.”

Duffield’s words suggest he is intent on driving the value of the Oracle bid up, so the saga is set to continue. The laryngitis-stricken Duffield admitted, however, that the Oracle takeover had created a “hostile” environment for PeopleSoft.

Oracle, like a rottweiler with a particularly juicy bone, is not letting go. After spending the last few weeks duking it out in a Delaware court, Oracle extended its PeopleSoft bid for the umpteenth time yesterday (see Oracle Extends Tender Offer and Oracle Extends Tender Offer Again).The market responded negatively to the results. Shares in PeopleSoft were down 12 cents (0.59 percent) to $20.31 today.

— James Rogers, Site Editor, Next-gen Data Center Forum