Antitrust Battle Takes Toll On PeopleSoft

PeopleSoft Inc. is still waiting for a federal judge to decide whether Oracle will be allowed to go forward with its acquisition bid, but in the meantime, the software vendor is still in business--and business wasn't as profitable in the second quarter as it was a year earlier.

License revenue jumped about 16% to $130 million in the quarter ended June 30, up from $112 million in the same period a year ago. Total revenue was $647 million, up from $497 in the year-ago quarter. But the company said net income was down 70% to $11 million, from $37 million in the second quarter of 2003. Those figures include restructuring and other charges, including charges directly associated with Oracle's hostile takeover bid, which cost PeopleSoft more than $10 million during the quarter.

The numbers were no surprise. Earlier this month, PeopleSoft warned shareholders that it would likely report total revenue between $655 million and $665 million, with license revenue in the range of $129 million and $133 million.

The Department of Justice and Oracle presented their final arguments on July 20 in federal court in San Francisco, and Judge Vaughn Walker is expected to decide within a few weeks whether Oracle's $7.7 billion bid for PeopleSoft violates antitrust laws.

In a statement, president and CEO Craig Conway said the trial and ongoing media coverage took its toll on earnings. "Clearly, it was the elephant in the room for our customers," he said. Still, PeopleSoft said it finished the quarter with more than 160 new customers, including Blockbuster, Casio Computer, FedEx, ING Bank, Lehman Brothers, and Toyota Motor Manufacturing North America.