Peoplesoft CEO says deals tougher to close

NEW YORK: Sales people at e-business software firm PeopleSoft Inc., are

working harder to close deals and customers are being more aggressive about

demanding discounts in the slowing US economy, the company's chief executive

said.

CEO Craig Conway said PeopleSoft's strong sales pipeline - the amount of

prospects that the company had turned into actual sales - has helped it buck the

trend in software by reporting earnings last month that beat Wall Street

expectations. "If you look back at PeopleSoft over the last five years,

we've converted one-half of the pipeline, plus or minus 3 per cent, every single

quarter," he told Reuters in an interview on Thursday.

But Conway said the flagging US economy and slower information technology

spending have widened that ratio for his company, whose software helps companies

run their business and automate their relationships with customers and

suppliers. "We may need 2.7 in the pipeline to get 1 deal," he said.

"We don't know ... we're not quite as confident."

While Conway said PeopleSoft was not seeing companies put off their spending

decisions - a common problem cited for earnings shortfalls at rival vendors such

as Oracle Corp. - he said customers were getting much more aggressive about

demanding discounts. "We're under tremendous pressure to discount ... but

they need this stuff so we eventually get the deal," Conway said.

In addition, Conway said customers were demanding certain concessions such as

free consulting for 60 days in return for agreeing to buy PeopleSoft's software.

PeopleSoft has stuck out in the software sector as being one of a very small

handful of firms to meet or exceed analyst expectations amid growing pressure

from the US economy.

The majority of software firms, including big names like Oracle, i2

Technologies Inc., BroadVision Inc., Ariba Inc. and E.piphany Inc., have been

forced to post earnings lower than analyst estimates and reduce their outlook

going forward.

Since the start of the year, when the slowdown of the US economy began to

surface, shares of PeopleSoft have outperformed rival Siebel Systems Inc. by 32

per cent. It has performed in line with the Standard & Poor's Computer

Software index after a spell of under-performing the index.

Conway said the main reason PeopleSoft had not been hit by the slowdown, was

because its software applications are designed from ground up to be accessible

over the Internet. "We bet the whole company on the Internet," he

said, adding that other vendors, namely Oracle and German software giant SAP AG

had said their applications are Internet based, but still require users to run

software locally, on their computers, as opposed to accessing the applications

over a browser. "I would say that 70 percent of our success in these last 6

quarters has been the technology," Conway said.

(C) Reuters Limited 2001.