PeopleSoft flooded by lawsuits

NEWS Lawsuits rained down on software firm, PeopleSoft last week, after the company announced that its business had hit a brick wall and is laying off staff. At least eight suits were filed by Thursday evening, all claiming that over the last two years, PeopleSoft issued misleading statements to shareholders about its prospects. In the past 12 months, PeopleSoft's stock price has tumbled from a 52-week high of $57 to $18 on Thursday, as investors worry that enterprise resource planning (ERP) software makers will not keep growing as businesses concentrate on handling the Y2K problem. Some of the lawsuits also targeted PeopleSoft executives, who, they say, profited from the inflated share prices caused by the misleading statements. The furore began on 29 January when PeopleSoft failed to meet analysts' expectations with its fourth quarter profit of $40m, compared with net income of $39.5m last year. The fact that total sales grew to $364.2m from $260.6m for the quarter did not appease lawyers for shareholders, because the growth was attributable to servicing existing clients. New licensing revenues were up a paltry 3 per cent, compared with an expected rise of 12 percent. On the day it announced the results, the company said it would lay off 430 workers - six per cent of its workforce. Not a day went by this week without a new lawsuit being filed alleging a litany of nefarious deeds. One filed by Faruqi & Faruqi alleged PeopleSoft's financial statements reflected "improper accounting for research and development costs in connection with certain acquisitions". Another, filed by Kirby McInerney & Squire, asserted that PeopleSoft's officers and directors sold more than $200m of their own PeopleSoft holdings at artificially inflated prices. A company that tracks insider selling, Investnet, reported that several PeopleSoft executives had been big sellers of the company's stock over the last year. For example, chairman David Duffield sold 450,000 shares in October and slightly more than one million shares in November, at prices ranging from $19.44 to $23.38. He still held more than 48 million shares, however. The company had no comment to make on the suits.