Analysts cautiously upbeat on enterprise software

PALO ALTO: While investors brace for earnings warnings on the recently

completed second quarter, analysts on Monday issued cautiously upbeat comments

on enterprise software makers.

"Within our group, we are not expecting any pre-announcements,"

Lehman Brothers analyst Neil Herman wrote in a note to investors. Herman covers

Oracle Corp., Siebel Systems Inc., PeopleSoft Inc., Veritas Software Corp. and

other companies that sell products to automate business processes and to store

and manage data.

Within the broader software sector, e-commerce players Commerce One Inc. and

Art Technology Group Inc. already have confirmed investors fears - both have

issued notice that their quarterly results would fall short of previous

forecasts.

While executives at Oracle, the world's second-largest software maker,

recently said they thought the worst was over and that several large corporate

deals that crumbled in previous months were being revived, Herman said

enterprise vendors are not yet out of the woods.

Continued softness in the United States and weakening conditions in Europe

are an ongoing concern, said Herman, who predicted that some enterprise software

companies could lower guidance during their second-quarter earnings calls in

late July. "We also are expecting that the September quarter is likely to

be quite tough for the sector as a whole," Herman said.

Software a mixed bag



Shares of enterprise software vendors were mixed in late trading on Monday.
Sales and customer service software maker Siebel Systems saw its stock rise

$3.30, or about 7 per cent, to $50.20 after Merrill Lynch analyst Craig Wood

boosted his rating to accumulate from neutral.

In a note to clients, Wood said he believed the firm's second quarter sales

targets were on track. "Although the market is far from fully recovered,

the pendulum appears to be swinging back in Siebel's favor, particularly as

expectations have been ratcheted down," he wrote.

Wood said his forecast for earnings of 14 cents a share was within reach.

That estimate is a penny higher than analysts' consensus, according to Thomson

Financial/First Call. Elsewhere, Oracle was slightly higher while Veritas and

PeopleSoft were trending lower.

(C) Reuters Limited 2001.