Close
  • Latest News
  • Artificial Intelligence
  • Big Data and Analytics
  • Cloud
  • Networking
  • Cybersecurity
  • Applications
  • IT Management
  • Storage
  • Sponsored
  • Mobile
  • Small Business
  • Development
  • Database
  • Servers
  • Android
  • Apple
  • Innovation
  • Blogs
  • PC Hardware
  • Reviews
  • Search Engines
  • Virtualization
Read Down
Sign in
Close
Welcome!Log into your account
Forgot your password?
Read Down
Password recovery
Recover your password
Close
Search
Logo
Logo
  • Latest News
  • Artificial Intelligence
  • Big Data and Analytics
  • Cloud
  • Networking
  • Cybersecurity
  • Applications
  • IT Management
  • Storage
  • Sponsored
  • Mobile
  • Small Business
  • Development
  • Database
  • Servers
  • Android
  • Apple
  • Innovation
  • Blogs
  • PC Hardware
  • Reviews
  • Search Engines
  • Virtualization
More
    Home Applications
    • Applications
    • Database

    Wall Street Smiles on Oracle-PeopleSoft Deal

    By
    Lisa Vaas
    -
    December 13, 2004
    Share
    Facebook
    Twitter
    Linkedin

      eWEEK content and product recommendations are editorially independent. We may make money when you click on links to our partners. Learn More.

      Following Mondays announcement that Oracle and PeopleSoft will merge, Wall Street gave the deal a thumbs-up.

      PeopleSoft Inc. stock is now trading close to Oracle Corp.s ultimate buying price of $26.50 per share—a price that some financial analysts say reflects an Oracle-supplied, optimistic premium on what the company would be worth outside of the deal.

      “PeopleSoft as a standalone entity was probably not worth $20 per share,” said John DiFucci, a managing director at Bear, Stearns & Co. Inc. in New York. The pumped-up price reflects Wall Streets faith in Oracles ability to turn the merged outfit into a lean software machine that will operate with fewer costs and will drive home more revenue, he said.

      “I think its good for Oracle, and its good for the industry,” DiFucci said, because Oracle CEO Larry Ellison has been right all along in saying that the industry has been in need of consolidation.

      “Frankly, I dont think well see a return to double-digit growth, at least not on a long-term basis, this year or next year,” he said. “Assuming all that, and assuming a lot of software companies came about or proliferated during the [dot-com] bubble, you come to the conclusion that we have too many out there, and there has to be a rationalization of the industry.”

      The deal also sent Oracle stock up almost 10 percent, largely due to the markets love for certainty, according to Tom Burnett, president of New York-based Merger Insight, an affiliate of Wall Street Access. “The market loves getting rid of the uncertainty,” he said. “Its a very good move for Oracle. The board distraction was beginning to take a big toll.”

      Oracle executives have forecast the deal as promising to be 8 cents accretive by next year—in other words, the merger will add 8 cents per share to the bottom line.

      The raw translation of that promise means that many PeopleSoft employees will lose their jobs, as Oracle squeezes redundancies out of the merged companies. Donovan Gow, an analyst for American Technology Research, in Greenwich, Conn., predicted that more than a few thousand employees will be considered redundant, and that the bulk of the victims will come from PeopleSofts ranks.

      “There will be massive head-count reduction across the combined firms,” he said. “I would presume the bulk will come from the PeopleSoft side.”

      /zimages/4/28571.gifClick here to read about the opportunity SAP views for itself because of the Oracle-PeopleSoft merger.

      Of course, many PeopleSoft personnel may jump ship rather than work for the company they have long regarded as a bitter enemy. “Oracle is considered a more aggressive, hard-hitting, less friendly type of corporate culture,” Gow said.

      “PeopleSoft has been viewed as a nicer place to work: more enjoyable, more camaraderie, more laid-back, less hard-hitting. Thats why they brought over [former PeopleSoft CEO] Craig Conway from Oracle: to instill a little more competitiveness to PeopleSofts environment.”

      Regardless of Conways tenure, PeopleSoft still has a different culture that will entail a tough adjustment for of its employees, many of whom will likely leave.

      But from a financial perspective, that will work in Oracles favor, according to DiFucci. “The PeopleSoft culture will be destroyed here,” he said. “The Oracle culture will dominate. … That kind of integration, [which is just about rationalizing the industry], is not as risky as a lot of acquisitions.

      “Youre just buying a customer base, which is reflected by the maintenance stream. … When youre integrating people, thats where the risk comes in: with integrating the culture.”

      In a conference call Monday morning wherein he discussed the companys quarterly financial results, Ellison said Oracle will refrain from swallowing other big companies until it has properly digested PeopleSoft. He left open the possibility that Oracle will acquire smaller companies, however—in other words, those smaller than $200 million.

      Ellison didnt specify whether he was referring to revenue or market cap, but DiFucci, for one, assumed he meant revenue. That means bad news for companies with an acquisition premium built in, if they in fact have revenue over Ellisons stated cutoff point.

      “You have to keep in perspective what Oracles best interests are. Its been very public what theyve been considering,” he said, adding that Ellison is not shy about stating Oracles intentions to pursue other acquisitions.

      /zimages/4/28571.gifCheck out eWEEK.coms for the latest database news, reviews and analysis.

      Lisa Vaas
      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.
      Get the Free Newsletter!
      Subscribe to Daily Tech Insider for top news, trends & analysis
      This email address is invalid.
      Get the Free Newsletter!
      Subscribe to Daily Tech Insider for top news, trends & analysis
      This email address is invalid.

      MOST POPULAR ARTICLES

      Latest News

      Zeus Kerravala on Networking: Multicloud, 5G, and...

      James Maguire - December 16, 2022 0
      I spoke with Zeus Kerravala, industry analyst at ZK Research, about the rapid changes in enterprise networking, as tech advances and digital transformation prompt...
      Read more
      Applications

      Datadog President Amit Agarwal on Trends in...

      James Maguire - November 11, 2022 0
      I spoke with Amit Agarwal, President of Datadog, about infrastructure observability, from current trends to key challenges to the future of this rapidly growing...
      Read more
      Cloud

      IGEL CEO Jed Ayres on Edge and...

      James Maguire - June 14, 2022 0
      I spoke with Jed Ayres, CEO of IGEL, about the endpoint sector, and an open source OS for the cloud; we also spoke about...
      Read more
      Applications

      Kyndryl’s Nicolas Sekkaki on Handling AI and...

      James Maguire - November 9, 2022 0
      I spoke with Nicolas Sekkaki, Group Practice Leader for Applications, Data and AI at Kyndryl, about how companies can boost both their AI and...
      Read more
      IT Management

      Intuit’s Nhung Ho on AI for the...

      James Maguire - May 13, 2022 0
      I spoke with Nhung Ho, Vice President of AI at Intuit, about adoption of AI in the small and medium-sized business market, and how...
      Read more
      Logo

      eWeek has the latest technology news and analysis, buying guides, and product reviews for IT professionals and technology buyers. The site’s focus is on innovative solutions and covering in-depth technical content. eWeek stays on the cutting edge of technology news and IT trends through interviews and expert analysis. Gain insight from top innovators and thought leaders in the fields of IT, business, enterprise software, startups, and more.

      Facebook
      Linkedin
      RSS
      Twitter
      Youtube

      Advertisers

      Advertise with TechnologyAdvice on eWeek and our other IT-focused platforms.

      Advertise with Us

      Menu

      • About eWeek
      • Subscribe to our Newsletter
      • Latest News

      Our Brands

      • Privacy Policy
      • Terms
      • About
      • Contact
      • Advertise
      • Sitemap
      • California – Do Not Sell My Information

      Property of TechnologyAdvice.
      © 2022 TechnologyAdvice. All Rights Reserved

      Advertiser Disclosure: Some of the products that appear on this site are from companies from which TechnologyAdvice receives compensation. This compensation may impact how and where products appear on this site including, for example, the order in which they appear. TechnologyAdvice does not include all companies or all types of products available in the marketplace.

      ×