If Oracle wanted to show itself both wise and gracious it would admit defeat, withdraw its bid for PeopleSoft and allow both companies to continue on their separate paths. Its also certain that, after weighing their chances, Oracle executives know that it has only the slimmest of chances to succeed in the proxy fight. Oracle is simply going through the legal motions to continue to reap whatever competitive advantages accrue by prolonging the uncertainty and distracting PeopleSoft from total focus on its business development strategy.If it ultimately fails to acquire PeopleSoft, Oracle still faces the same key problem that it confronted before making the takeover bid eight months ago: how to keep growing the business at a time when relational database sales are unlikely to grow at the rate they did in the 90s. While long a leader in the database field, Oracle hasnt been able to reach the top as an enterprise applications vendor. As a result, the company had been counting on the acquisition of the PeopleSoft/J.D. Edwards enterprise applications business to reach that goal. If its bid fails, Oracle either has to cast about for a new acquisition target or try to play catch up to PeopleSoft by building up its existing applications product line. The company might cast looks at Computer Associates, SAP or Siebel Systems, but there doesnt seem to be any other major enterprise application software players that would offer as complementary a set of products as PeopleSoft offers. Next page: Time to focus on current line.
But its time for Oracle to start thinking about what it must do to remain competitive when stockholders vote to reject the hostile takeover. The merger of PeopleSoft and J.D. Edwards dropped Oracle from second to third on the list of the largest independent software vendorsnot a desirable position for a company that aspires to be No.1.