The Pleasanton, Calif.-based company Friday says it will exercise its option to purchase one hundred percent of the outstanding shares of Momentum Business Applications, Inc.
Under the terms of the deal, PeopleSoft expects to pay around $90 million for Pleasanton, Calif.-based Momentum.
With the purchase, PeopleSoft will own the intellectual property in the products developed by Momentum and thus will no longer have any obligation to pay a royalty to Momentum on those products.
“It’s a natural progression of a relationship we’ve had with Momentum since 1998,” says PeopleSoft spokesperson Steve Swasey. “Our management team was faced with a crossroads. They could either continue to pay royalties for Momentum’s software or they could spend the $90 million to purchase the company outright.”
Swasey says Momentum was crucial to the success of PeopleSoft’s latest customer relationship management tool PeopleSoft 8. Out of 170 separate products used in the platform, Momentum was responsible for 25 of them.
This is the fifth acquisition in less than a year by PeopleSoft. Similar to its asset grab of Annuncio, the buyout of Cohera’s assets in August, SkillsVillage’s technology back in May and purchase of Calico’s interactive selling software in December, PeopleSoft will add Momentum’s assets to its growing cache of customer relationship management (CRM) programs.
The Momentum transaction still needs to go through the proper channels before it becomes a done deal. But if everything gets a green light, the deal should be complete by the end of March.
Overall, the company is on a roll. For the full year of 2001, PeopleSoft’s software license revenue increased 30 percent to $645 million, and total revenue increased by 19 percent to a record $2.07 billion. Income from recurring operations increased 107 percent to a record $190 million, or $0.59 per share, up from $92 million, or $0.30 per share in 2000.
Peoplesoft’s cash and investments rose to $1.67 billion at December 31, 2001, an increase of $158 million during the fourth quarter, and an increase of $577 million during the full year 2001. Days sales outstanding (DSO) at the end of 2001 were 64 days, an improvement from 83 days at the end of 2000.