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PeopleSoft soars on 3Q
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October 18, 2000: 3:16 p.m. ET
Software maker's stock jumps 23% after posting strong 3Q earnings
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NEW YORK (CNNfn) - Shares of PeopleSoft soared 23 percent Wednesday after the business management software provider turned in third-quarter earnings that beat Wall Street expectations.
In afternoon trading, PeopleSoft (PSFT: Research, Estimates) jumped $7.62 to $40.38, a gain of 23.3 percent, with more than 19 million shares changing hands.
 The company also announced plans to buy back $100 million of its stock and promoted its chief financial officer to senior vice president.
PeopleSoft posted earnings of $23.4 million, or 8 cents per share, compared with $500,000, or zero per share, during the same period a year ago, beating the analysts' estimate by a penny.
The Pleasanton, Calif.-based company reported net income, including extraordinary gains, of $68.7 million, or 23 cents per share, in the third quarter, compared with a net loss of $443,000, or zero per share, in the year-ago quarter.
Revenues rose to $443.1 million from $346.1 million in the year-ago quarter, a 28 percent gain. The company also announced several new customers in the third quarter including: Salomon Smith Barney; Expedia Inc.; Caterpillar Inc.; Ernst & Young; and the Tokyo Stock Exchange.
"This is the year in which the Internet evolved from a consumer vehicle to a business tool embraced by real companies," said PeopleSoft President and
Chief Executive Craig Conway in a statement. "PeopleSoft is in the market to provide the infrastructure for companies to build a collaborative network between their customers, suppliers and employees via the Internet."
Analysts laud results
Following the results, Lehman Brothers analyst Neil Herman reiterated his "buy" rating on PeopleSoft shares and boosted its price target to $44 a share from $30. Herman also upped his 2000 and 2001 revenue and earnings views.
 "When we upgraded PeopleSoft in early July, it appeared to us that after a long period of darkness, there was light at the end of the tunnel," Herman said in a research note. "[With the subsequent quarter in July] we believed this case much more strongly. This quarter however is, in our view, a landmark quarter as the company has now clearly emerged from the tunnel."
"Most importantly, PeopleSoft blew away the license revenue number, which we believe is the more important indicator of a turnaround," Herman said.
ING Baring analysts William Lanzon and Nathan also applauded PeopleSoft's quarter, boosting its rating to a "buy" from a "hold," and set a $45 price target, "based on growing momentum and a strengthening pipeline."
UBS Warburg analyst Andrew Roskill said he was encouraged by the company's third-quarter results, particularly as it moves into a new product cycle centered on its recently released PeopleSoft 8 software.
"This is a company that is clearly in rebuild mode. It's still somewhat of a 'show me' situation but it's a great start," Roskill said.
Separately, PeopleSoft said its board approved plans to repurchase up to $100 million of its common stock during the next 12 months. As of Sept. 30, the company had 283 million shares outstanding.
Also, Chief Financial Officer Steve Hill was promoted to senior vice president of business development and will be replaced by Kevin Parker, former CFO at Aspect Communications (ASPT: Research, Estimates). 
--from staff and wire reports
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