PeopleSoft Posts Slight 2Q Gains, Gets Ready To Close Edwards DealPeopleSoft Posts Slight 2Q Gains, Gets Ready To Close Edwards Deal

Oracle's hostile takeover bid doesn't appear to be slowing PeopleSoft Inc. down.

As expected, PeopleSoft on Thursday reported fairly healthy financial results for its second quarter--even as it continued to face off with Oracle, which is still pursuing its hostile $6.3 billion takeover bid, and prepared to complete its acquisition of J.D. Edwards & Co. after its tender offer expired at midnight EDT.

The maker of business applications reported net income of $36.5 million for its second quarter ended June 30, a slight increase from $36 million in the year-ago quarter. Revenue for the quarter was $497.7 million, up from $482.2 million in the same quarter last year. But license revenue fell to $111.7 million, from $131.9 million last year.

Operating margins from recurring operations as a percentage of revenue increased to 12.9%, up from 11.3% last quarter.

"As you look beneath the surface of these financial results, you can see how strongly positioned we are," PeopleSoft CEO Craig Conway says.

Despite the uncertainty surrounding Oracle's takeover bid, PeopleSoft says it added about 100 new customers. Included in the list of companies that purchased PeopleSoft software in the second quarter are Bausch & Lomb, Circuit City, Hewlett-Packard, Metropolitan Life Insurance, Sears Canada, Target, Time, and Yum Restaurant Services.

The cash-and-stock deal for J.D. Edwards was scheduled to close at $14.74 per share, slightly more than the $14.36-per-share price estimated when the two sides revised the terms nearly a month ago.

PeopleSoft's marriage to J.D. Edwards--consummating a courtship that began in October--hasn't discouraged Oracle, which has extended its $19.50-per-share bid until Aug. 15. "We are in this for the long haul," executive VP Chuck Phillips told PeopleSoft and J.D. Edwards customers during a teleconference Thursday.

But the deal creates more headaches--and raises the price tag--for Oracle. To pull off a takeover of the combined PeopleSoft and J.D. Edwards, Oracle will have to pay more--at least $7.3 billion in cash instead of the $6.3 billion it would have cost to get PeopleSoft alone at the current offer. The added cost reflects the additional 52.6 million shares PeopleSoft is issuing to buy J.D. Edwards.