Oracle Plots Acquisition Course

PeopleSoft is just the beginning: CEO Larry Ellison said Oracle's five-year roadmap for IT software domination will be paved with buyouts.

At its annual financial analysts meeting at its headquarters in Redwood Shores, Calif., Wednesday, Oracle Corp. said its in a position of strength and plans to use that to acquire other companies in its quest to give software giants SAP AG and Microsoft Corp. a run for their money.

For starters, Oracle last month lobbed

The goal, however, is long term. Larry Ellison, Oracles CEO, said he is looking five years out on the IT landscape and making moves now to dominate in the future.

Ellison said the applications market is sorely in need of consolidation, and Oracle looks to lead the charge.

"We have one dominant player, SAP, that is bigger than [players] two, three and four combined," Ellison said. "Maybe two, three and four should combine and give them a run for their money."

Ultimately, Oracle wants to become a one-stop shop by providing everything a company would need to operate its business. It will do that through organic and acquisitive growth, homing in on such areas as outsourcing, integration, storage and vertical markets.

"Lower cost of ownership will be important [in five years]," said Safra Catz, an Oracle executive vice president. "Well look backward from there. We look to businesses that can be run at the kind of margins we run. We do acquisitions at a very fair price and run them well."

In this regard, Oracle said it is committed to acquiring rival PeopleSoft but made no mention of increasing its offer price of $19.50 per share—exactly what some industry analysts say must happen for the offer to be taken seriously by PeopleSoft shareholders.

To date, only about 11 percent of PeopleSoft shares have been approved for sale to Oracle.

Ellison, for his part, said there are several scenarios that can play out with the acquisition, including: The government approves the acquisitions and Oracle buys PeopleSoft; or Oracle wins its suit filed in Delaware, PeopleSofts poison pill is nullified and Oracle buys PeopleSoft.

"If the government says we can buy them, we buy them," Ellison said. "I wouldnt know what to push on. You just wait for the government. Its a simple scenario: The government says we cant buy, its over."

The Department of Justice is weighing in on both sides of the deal. Earlier this month the DOJ made a second request for information from Oracle regarding the competitive nature of the PeopleSoft acquisition—signaling serious antitrust issues.

The DOJ has until July 14 to make a second request to PeopleSoft in its friendlier quest to purchase J.D. Edwards & Co.

While Oracle has said its not interested in purchasing JDE, its largely anticipated that the deal between PeopleSoft and JDE will go through.

PeopleSoft has until July 17 to make good on its offer to JDE, of Denver, Colo., while Oracle has extended its tender offer to PeopleSoft to July 18.