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PeopleSoft Says It Will Eliminate 750 to 1,000 Jobs

The cuts are expected to help boost financial results as the company adjusts to its takeover of J.D. Edwards.

September 05, 2003|Alex Pham | Times Staff Writer

PeopleSoft Inc., the target of a flagging takeover attempt by archrival Oracle Corp., said Thursday that it would cut 750 to 1,000 jobs as it wraps its $1.9-billion acquisition of J.D. Edwards & Co.

Combined with other cuts, the staff reduction -- up to 7.7% of the workforce -- is expected to save the combined company $167 million to $207 million a year, helping to boost sales and profit projections over the next 18 months, said Kevin Parker, PeopleSoft's chief financial officer.

PeopleSoft shares fell 30 cents to $19.35 in regular Nasdaq trading but climbed as high as $20.13 after hours.

Oracle has bid $19.50 a share, or $7.3 billion, for PeopleSoft. Oracle Chief Executive Larry Ellison launched the buyout offer in June, days after PeopleSoft announced it would purchase Denver-based J.D. Edwards.

With just 11% of PeopleSoft shares tendered for the takeover, however, it's unlikely that Ellison could pull off an acquisition unless he sweetens his offer, analysts said.

"The wind is definitely out of their sails," said David Hilal, an analyst with investment firm Friedman Billings & Ramsey Co. "Investors are ignoring Oracle. Larry will have to significantly up his bid to get investors' attention."

PeopleSoft's acquisition of J.D. Edwards, completed last month, further complicates matters for Ellison, who had hoped to buy only PeopleSoft.

But Oracle spokesman Jim Finn said the company remained "fully committed to our offer and are today announcing an extension of the offer through Oct. 17." The tender offer previously was set to expire at midnight EDT on Sept. 19.

PeopleSoft's Parker, in a presentation to financial analysts, said the combined company was expected to post sales of $575 million to $590 million in the current quarter, up from $471 million a year earlier. He also forecast a net loss of 9 to 10 cents a share, largely from merger expenses.

In 2004, Parker said, the company would post a net profit of 57 to 62 cents on revenue of $2.8 billion to $2.9 billion.

The Pleasanton, Calif.-based company, which employs 13,000 workers, expects to have 12,000 people by the end of next year.

"The financial forecast exceeds our expectations," Hilal said. "Sadly, cutting people ... is one of the benefits of a merger. While it's bad news for the people whose jobs are being cut, from an investor standpoint, you want to see costs get wrung out of the system."

PeopleSoft executives said the cuts would come from administrative staff, not from its developers, consultants or salespeople.

"Revenue-generating positions will not be affected," spokesman Steve Swasey said.

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