SAP, PeopleSoft Earnings Look Brighter; ERP Strikes Back
P.J. Jakovljevic - January 26, 2000

Event Summary

1990s Enterprise Resource Planning (ERP) juggernaut SAP AG is heading into the new millennium looking like its old self, and its rival PeopleSoft is not looking too bad either. Surprising many, enterprise software giant SAP pre-announced strong fourth quarter earnings, saying pre-tax earnings had doubled the final quarter of 1999 after a third-quarter profit warning. License revenue skyrocketed 40% to 800M EUR ($822.7M U.S.) in the fourth quarter and sales rose 25%, well above Wall Street estimates. However, SAP did not break down the revenue among geographies or product lines. SAP has heavily invested in its mySAP.com Internet-based software system but there is no evidence it is contributing to the surge in software sales. Meanwhile, PeopleSoft also pre-announced a strong fourth quarter, saying it expects to beat Wall Street estimates. Earnings from recurring operations are expected to be two to four cents a share. PeopleSoft's license revenue is expected to grow 35% to 40% in the fourth quarter from the previous quarter, but a reduction in service revenue of up to 5% will offset much of the increase. PeopleSoft said revenue from enterprise software should rise 30% to 35% while revenue from its recently acquired Customer Relationship Management (CRM) system would grow 50% to 60% for the quarter from the previous quarter. Last week PeopleSoft finalized its purchase of Vantive Corporation, its long-time partner for CRM systems. Charges of $50M to $70M for the purchase will be reflected in fourth quarter results...