Study: Oracles Takeover Bid Could Hurt Sales

 
 
By Lisa Vaas  |  Posted 2003-07-30
 
 
 
If Oracle Corp. keeps molesting PeopleSoft Inc., people will stop buying its products, research shows.

Thats because buying patterns correlate to opinion changes—and corporate IT buyers opinions of Oracle have slumped since the Redwood Shores, Calif., company began its aggressive pursuit to take over PeopleSoft, of Pleasanton, Calif., according to the study.

The study, Techtel Corp.s Technology Demand Index, released on Wednesday, showed that positive opinion of Oracle within the approximately 800 companies surveyed fell from 59.8 percent to 57.2 percent, and its negative opinion increased from 14.5 percent to 19.7 percent, between the first quarter and earlier this month. Oracle began its attempts to take over PeopleSoft in June.

Conversely, Oracles behavior has influenced positive opinion regarding PeopleSoft. During the same period, IT buyers positive opinion of PeopleSoft rose from 34.1 percent to 40.2 percent, while its negative opinion dropped from 13.1 percent to 12.9 percent.

Mike Kelly, CEO of the Emeryville, Calif., research firm, said that IT buyers product consideration correlates closely with changes in companies opinions. "Its unlikely youre even going to consider something you have a negative opinion of," he said. "Where does this show up? Your sales force, they show up at a sales opportunity, they have to overcome the negative opinion before they convince somebody to buy from them. Cost of marketing goes up, cost of attracting people who dont want to work at a place thats maybe not the best place to work goes up."

Its also tougher to jump through the acquisition gauntlet when nobody likes you, Kelly said. "Theyve got to get through legislators, regulators. Theyve got to get employees at the company being acquired to stay there, and investors, and theyve got to get customers to stay with them. …

"Its infecting these people they have to win over. [Oracle] has to put in full-page ads saying, Oh no, we wont retire the products." Kellys reference is to ads Oracle took out in publications such as the Wall Street Journal. In the ads, Oracle vowed to keep supporting PeopleSoft products post-acquisition, in spite of seemingly contradictory statements CEO Larry Ellison made earlier in the ongoing saga.

Indeed, numbers show that IT buyers consideration of Oracle purchases has dropped almost in lockstep with those buyers opinion of the company, the most dramatic decrease being from the first to the second quarters of this year, when the acquisition activities began. Oracles net opinion changes, between the spike in negative and the dip in positive, come in at a slide of 17 percent, while its rating for how many IT buyers are considering Oracle database servers purchases slipped on the order of about 27 percent.

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