Duffield Emerges as PeopleSofts Lone White Knight

Opinion: In replacing fired CEO Craig Conway, PeopleSoft founder Dave Duffield may prove to be the only one who can save his company from an Oracle takeover.

Industry analysts and commentators may have been too quick to jump to conclusions when they claimed that PeopleSofts decision to fire CEO Craig Conway is a sign that the company is preparing to come to terms with Oracles buyout bid.

That is certainly a fair assessment considering that under Conways leadership, PeopleSoft has managed to ensnare itself in a trap that may prove impossible to escape from.

But an equally plausible scenario is that the board replaced Conway with PeopleSoft founder and chairman Dave Duffield as the beleaguered companys last, best chance to restore customer and shareholder confidence.

/zimages/4/28571.gifRead more here about the PeopleSoft boards decision to fire Conway.

To survive, PeopleSofts sales and revenue have to start growing again—quickly, strongly and consistently. All of the lawsuits and related legal maneuvers wont keep PeopleSoft Inc. out of Oracle Corp.s hands if it cant prove it will deliver shareholder value as an independent company.

More than 18 months ago, Conway started courting merger partners as a way to ensure that the companys enterprise applications technology would survive and prosper in a maturing market. Conways first mistake was to broach the subject with Larry Ellison and Oracle Corp.

/zimages/4/28571.gifClick here to read about whether PeopleSofts alliance with IBM will stall an Oracle takeover.

When youre playing for high stakes with Ellison, the last thing you want to do is let him see your cards before you win the pot. Conway, a former Oracle executive, made his pitch for a deal with Oracle in which he and his companys software would retain a prominent role in the new organization.

When Conway couldnt reach an agreement to his advantage, he tried to walk away. All Oracle had to know was that Conway was putting PeopleSoft into play. That was enough to turn Oracle an implacable suitor.

Instead, PeopleSoft turned to J.D. Edwards & Co. to make a deal. This allowed PeopleSoft to add to its customer base and to acquire software that filled some gaps in its enterprise applications suite, particularly products that serve manufacturing industries. Better yet, this deal would ensure that PeopleSoft would remain the senior partner.

Now, PeopleSoft finds itself in a far worse situation than if it hadnt tried to make any deal at all. Oracle is aiming to acquire the combined companies, negating whatever assurances PeopleSoft made to J.D. Edwards employees and customers—as well as to its own—about what the future holds for them.

Next Page: Conway overplays the IBM alliance.

John Pallatto

John Pallatto

John Pallatto has been editor in chief of QuinStreet Inc.'s eWEEK.com since October 2012. He has more than 40 years of experience as a professional journalist working at a daily newspaper and...