PeopleSoft Throws Customers a Security Blanket

PeopleSoft on Thursday created a so-called customer protection plan that would spike its purchase price by some $354 million were Oracle to slack off on selling, developing or supporting PeopleSoft apps post-merger, according to a securities filing.

PeopleSoft Inc. has thrown a security blanket around its customers during the ongoing drama of Oracle Corp.s attempt to acquire it.

To minimize business loss and mollify queasy customers, PeopleSoft on Thursday created a so-called customer protection plan that would spike its purchase price by some $354 million were Oracle to slack off on selling, developing or supporting PeopleSoft applications post-merger, according to a securities filing.

That money would go to slighted PeopleSoft customers in the form of a payment equal to two to five times their licensing fees if specific situations transpire. Namely:

If within one year of the customer contracts date, PeopleSoft is acquired or merged, and PeopleSoft is not the acquirer; and within two years of the contract date, the acquiring company either 1) discontinues support before the end of the support promised by PeopleSoft or 2) announces that it will stop licensing PeopleSoft products to new customers or 3) stops updating supportable products; and a customer requests payment in writing by Dec. 31, 2005 and has paid for support services.

According to the filing, the maximum amount of payments to be made under the customer protection program is $354 million. The exercising of such a program is not probable, according to a PeopleSoft release, as the company "hopes that any acquirer would continue the support and development of our products."

Oracle, for its part, stuck to the song its been singing regarding ongoing support of PeopleSoft products and customers. "We have repeatedly said that we would continue to develop and enhance PeopleSoft products and that we will support them for at least 10 years," said Oracle spokeswoman Jennifer Glass in an e-mail exchange.

According to Jim Finn, an Oracle spokesman, the customer protection plan is just another tactic to sour the deal. "This is a scorched-earth policy that is meant to entrench management and reduce the value of the company," Finn said in a statement.