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NEW YORK — The stock of PeopleSoft Inc. dropped sharply Tuesday after the maker of business software warned that first-quarter revenue would be well below Wall Street’s expectations. 

The Pleasanton, Calif., company said new software licenses would be $130 million to $135 million in its first quarter, or more than 20 percent below the mean estimate of analysts polled by Thomson Financial/First Call. The company expects to post quarterly earnings from recurring operations of 14 cents a share, below the 15-cent consensus estimate. 

Analysts were surprised by the magnitude of the license revenue miss. Several bulls, including Goldman Sachs & Co. and Credit Suisse First Boston, rushed to downgrade their ratings on the popular business-software maker. Some fear an 18-month-old product upgrade is winding down and its cross-selling of new products has slowed. 

In trading Tuesday, shares of PeopleSoft fell $12.21, or 33 percent, to $25.16 on the Nasdaq Stock Market. 

Some of the company’s supporters highlighted the fact that the projected earnings miss was minimal, despite the license revenue shortfall. They also noted that maintenance and consulting revenue appear to be in line with expectations. 

“We see this miss more as evidence of the difficult spending climate than an indication of a serious misexecution problem,” said Jim Mendelson, analyst at SoundView Technology Group, who kept his strong buy rating. 

PeopleSoft executives told analysts that no one product or geography accounted for the shortfall. Lower activity across the board caused the delay of both large and small contracts, rather than competitive losses, executives told analysts. The company did not hold a conference call and will release final results April 25. 

Critics, however, see more problems ahead for the company. PeopleSoft’s results were buoyed by the introduction of a new version of its flagship product, PeopleSoft 8, in August 2000 and that upgrade is losing steam. Sales of a customer relationship management product launched last June have also slowed, the critics say. 

PeopleSoft’s shortfall, which follows similarly disappointing results from rival Oracle Corp. in its February quarter, reignited a debate on Wall Street about whether investors’ expectations for the software sector remain too optimistic.