September 21, 1999 11:15 AM PDT

PeopleSoft founder steps down as CEO

PeopleSoft founder David Duffield is stepping down as chief executive of the struggling business software maker, the company said today.

The 12-year-old company announced that president and chief operations officer Craig Conway will take on the additional role of chief executive officer. Duffield will remain chairman of PeopleSoft's board.

Craig Conway The news came as little surprise to industry observers who say Duffield, 58, had already retreated from overseeing daily operations at the company after Conway came aboard in late May.

"It's been obvious for a year or more that David wanted to get out," said Jim Shepherd, an analyst at Boston-based AMR Research. "He's tired. He's done it."

Amid Duffield's role change and the recent retirement of his brother and chief operating officer, Al Duffield, a line of top level managers have left PeopleSoft amid the company's struggle to boost software license revenues and reinvent its business software for the Internet.

Pleasanton, California-based PeopleSoft's shares have plunged 45 percent in the last year because of enterprise resource planning (ERP) software market saturation and investor concern that corporations are delaying purchases while they fix Year 2000 computer problems. PeopleSoft and rivals, such as SAP and Baan, have also been hurt by the industry slowdown, though some analysts say the market will rebound by the middle of next year.

"Typically, when a company doesn't perform, the CEO is the first to go," said Steve Bonadio, an analyst at Stamford, Connecticut-based Meta Group. Bonadio said Duffield had a difficult job trying to deal with the company's recent financial downturn, and Conway has an even bigger challenge ahead of him.

"Not many people know Conway," Bonadio added. "Since he took the helm of PeopleSoft, he hasn't been the most visible of people. There's a question mark there on whether he can get the job done, whether he has the charisma or vision to do an effective job at PeopleSoft."

At the company's annual user conference held in New Orleans last month, Conway regained some enthusiasm as he laid out plans for PeopleSoft's Internet strategy as well as a commitment to send more sales representatives back into the field to support the company's software installations. Some analysts say Conway is already moving to build a more organized corporate culture within PeopleSoft, which had been known under Duffield as a casual, employee-friendly place.

"Conway's focus is on pragmatic, tactical things to get the company in good operating form right now," said AMR Research's David Caruso. Despite having a grasp on the company's problems, Caruso said the user conference lacked any strong announcement that would drive people to bank on any aggressive PeopleSoft comeback.

Conway, who is 44, is former chief executive of San Jose, California-based OneTouch Software. Duffield will continue to focus on building relationships with customers and employees, the company said.

"There's no doubt that Conway has a tough job ahead of him, but he has a great brand name with a loyal customer base," AMR's Shepherd said. "He's walking in at the low point, but by no means is the company not going to survive."

 

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