Analysts say Oracle takeover

By Lisa Vaas  |  Posted 2003-11-26 Print this article Print

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Delusions aside, its plain to see that Oracles sustained takeover attempt has helped PeopleSoft to do some fancy footwork. Carl Lehmann, vice president of enterprise application strategies at Meta Group, said that if it werent for Oracle, PeopleSofts acquisition of J.D. Edwards would be taking far more time. Another positive outcome of the takeover attempt has been the forging of a closer bond between PeopleSoft and its customers&#151similar to any group of people who suddenly find themselves attacked by hoards of Visigoths.

"I think [Oracles takeover attempt] has helped PeopleSoft," Lehmann said. It forced them to do a real lot of stuff really fast, like complete the acquisition of J.D. Edwards, get their costs in line and cozy up real close to their customers. They put a lot more energy into that than if Oracle hadnt done this. It was like, All hands on deck, and then they came up with the CAP."

Of course, when most acquisitions occur, theres a lot of work to do, and theres a lot of time that passes while that work gets done, Lehmann pointed out. The time involved in mopping up an acquisition can cause confusion amongst shareholders and customers. If a company doesnt want that confusion to hit, if it doesnt want sales cycles to stretch out to forever, if it doesnt want its stock price to dip, it has to do things fast. An acquiring company has to complete the transaction post-haste, with all conditions agreed to by all parties, Lehmann said.

Thats why an acquiring company has to create a crystal-clear message about where its going with the acquired company. "An acquiring company has to communicate all that as rapidly and articulately as possible," Lehmann said. "If you do all that, you negate any sales delays from your prospect list, and you negate any hesitancy from your shareholder base. Most companies attempt to do that, particularly with a big deal, but Oracle made PeopleSoft do that faster than anything."

Thanks to Oracle, PeopleSoft not only acquired J.D. Edwards relatively painlessly, it strengthened its ties to its customers and shareholders, making it a better company. Thats a far cry from the outcome that many industry insiders foresaw back when Oracle first launched its takeover in the spring. Back then, many conjectured that Oracle was launching the takeover in a cynical attempt to create fear, uncertainty and doubt, thereby causing PeopleSofts stock to plunge, hurting their sales and crippling an Oracle competitor.

If that was the intent, it backfired. "Good try, though," Lehmann said. "For a while there, it seemed smart, particularly [with Oracle] exposed to the small-to-medium business market and the applications market. It seemed like a good idea, but I dont think it worked."

The question is, why does Oracle keep making moves that do nothing but help PeopleSoft become stronger and closer to its customers, like Mondays analysts call with Henley? Betsy Burton, an analyst with Giga, said she views Mondays call as nothing but a reminder that the bids still on the table. "Thats what they accomplished with that call," she said. "Another press person asked me if they in fact accomplished that, and I said, Well, youre calling me."

Touche. But what about Oracles vow to stage a coup in PeopleSofts board of directors? The company plans to file an independent slate of board candidates in January. If its unsuccessful in its bid to acquire PeopleSoft through traditional means, it will force change at the board level and then get its planted directors to vote in the merger. The company is planning this in spite of the the fact that the DOJ hasnt made a decision in its investigation of the merger, while the European Commission extended its investigation into the potentially anti-competitive nature of the deal.

Click here for more information on the European Commissions investigation of the PeopleSoft-Oracle Takeover Bid.

Burton scoffed at the idea. "Its like saying a new political party is going to get a new president in," she said. "They have to convince stockholders to vote in a new board of directors, that theyre the right ones to do this job, etc. Oracle cant force these people into these positions."

Next page: What PeopleSoft customers think about Oracles botching of its takeover attempt.

Lisa Vaas is News Editor/Operations for and also serves as editor of the Database topic center. Since 1995, she has also been a Webcast news show anchorperson and a reporter covering the IT industry. She has focused on customer relationship management technology, IT salaries and careers, effects of the H1-B visa on the technology workforce, wireless technology, security, and, most recently, databases and the technologies that touch upon them. Her articles have appeared in eWEEK's print edition, on, and in the startup IT magazine PC Connection. Prior to becoming a journalist, Vaas experienced an array of eye-opening careers, including driving a cab in Boston, photographing cranky babies in shopping malls, selling cameras, typography and computer training. She stopped a hair short of finishing an M.A. in English at the University of Massachusetts in Boston. She earned a B.S. in Communications from Emerson College. She runs two open-mic reading series in Boston and currently keeps bees in her home in Mashpee, Mass.

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