Oracle v. PeopleSoft Trial Closes

Michael Singer

Updated · Oct 16, 2004

All eyes are on a Delaware Chancery Court judge now that Oracle's lawsuit
against PeopleSoft closed Friday.

The two-weeks' worth of testimony centered on Oracle's request that PeopleSoft remove its
Customer Assurance Program (CAP). The guarantee is a refund to
PeopleSoft customers should the company be acquired by a hostile
takeover. The program, along with a shareholder poison pill, are about all
that stands in the way of Oracle's relentless proposed takeover
of PeopleSoft.

Judge Leo Strine Jr. did not say when he might make his ruling, but he
did point out that Oracle should continue to negotiate with PeopleSoft.

A spokesperson for PeopleSoft would not comment on the trial beyond
the testimony that company officials gave all week, but noted that
PeopleSoft is still planning on continuing with its anti-takeover trial
on Jan. 10.

Still, even PeopleSoft executives have noted the tide has definitely
shifted against them. On Thursday, board member George “Skip” Battle
suggested that the company does not currently have an outside bidder or
“white squire” to step in at the last minute to make a different
purchase, but that the company would certainly welcome an investor or
group of investors.

PeopleSoft was dealt another blow this week when Ram Gupta, head of
software development, left the company. A company spokesperson did not
comment on the departure and declined to say whether the man who helped
PeopleSoft broker
a $1 billion licensing deal with IBM had resigned
or was fired. Gupta's exit follows the surprise ouster
of former CEO Craig Conway by PeopleSoft's board of
directors. Founder and Chairman Dave Duffield now runs the company as
chief executive.

Earlier in the trail, PeopleSoft board member Steven Goldby told the
court that he was open to discussing a deal with Oracle at the “right
price,” but it would have to be for more than the current tender offer
of $21 per share or $7.7 billion. Oracle CEO Larry Ellison and
co-president Safra Catz countered later in the trial, suggesting that
the price would more than likely go down and not up. PeopleSoft stock
dropped 23 cents to end the day at $20.85 per share.

Mike Dominy, senior analyst of business applications and commerce at
The Yankee Group, told that Oracle's next step
is to make sure it does its homework and develops a well-thought-out
acquisition plan and customer support program.

“The acquisition of PeopleSoft by Oracle should not have a negative
impact on PeopleSoft customers,” Dominy said. “Enterprises running
PeopleSoft applications on Oracle should benefit as Oracle develops
solutions that are more tightly integrated within the technology stack
(application server, database and applications).

“PeopleSoft customers
that currently run on IBM infrastructure should be leery,” he continued. “In the short
term — for the 24-36 months following the acquisition — Oracle must
develop a maintenance and support program that ensures adequate support
for PeopleSoft customers that are IBM centric. Oracle must develop
offerings that allow PeopleSoft customers running on IBM to migrate to
an Oracle platform. These offerings must be offerings and not
a requirement.

“It is imperative that Oracle manage PeopleSoft
customers running on IBM (much of the legacy JD Edwards customer base)
carefully to ensure continued maintenance revenue and/or the opportunity
to realize additional new license and services revenue.”

Regardless of the Delaware case, Oracle's hostile takeover is still
under investigation by the European Union regulators. The probe is
scheduled to wrap up by November 9, but officials with the EC said the
initial opinion might not be enough to stop the deal from happening.

The current $7.7 billion bid has already passed
the litmus test
of the U.S. Department of Justice's antitrust trial.
The DoJ declined to pursue its appeal after U.S. District Court Judge
Vaughn R. Walker ruled in Oracle's favor.

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  • Michael Singer
    Michael Singer

    Michael Singer is a career coach, podcast host, and author to help you step into a career you're excited about. Currently, He is a coach and trainer helping entrepreneurs and executives achieve business and leadership success. He is also an award-winning business journalist focused on the intersection of technology, Big Data, Cloud, SaaS, SAP, and other trending technology.

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