Risky Business

By Lisa Vaas  |  Posted 2003-09-11 Print this article Print

Thats because investors would rather have their money in a few companies that are doing well, as opposed to having money in "hundreds that arent profitable and from which they cant make any money," he said. "If you compare software to other industries they invest in, softwares much more fragmented," Phillips said. "Its high risk. They want less risk: bigger companies to invest in." But PeopleSoft isnt hundreds of little companies, one audience member pointed out. How will taking it out help investors? "Id say [they want to get rid of] hundreds that are unprofitable and struggling," Phillips said. "PeopleSoft over the past year has been struggling. Thats one reason we believe they went to J.D. Edwards. They had to do something."
Ironically, one analyst said that Oracles bid for PeopleSoft is indicative of the fact that Oracle itself has to do something. Oracle hasnt been selling new licenses and is casting about for new revenue streams—in this case, revenue from PeopleSoft customer maintenance fees, according to Charlie Garry, senior program director for database research at Meta Group, in Stamford, Conn.
According to Garry, many Oracle customers, instead of renewing their software licenses when they come due, have instead been rebuying the same exact licenses—no more, no less. Oracle has been cutting deals that are up to 80 percent discounted when restructuring the licenses under current terms, Garry said. The license revenues have been showing up as new revenue, but its essentially old wine in new bottles, he said. "The Oracle sales rep doesnt get commissioned on maintenance," Garry said. "So theyre always looking for new license revenue. Its cheaper to rebuy the licenses you already own. Oracle is in a race to diversify their revenue stream as quickly as possible. A huge portion of their revenue comes from database sales. And the database market isnt growing. To remain viable, theyve got to diversify their revenue stream," he said—thus the move on PeopleSoft. Next page: How Oracle will market PeopleSoft apps.

Lisa Vaas is News Editor/Operations for eWEEK.com 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 eWEEK.com, 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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