Oracle
And Peoplesoft: The
Next Round
Think
of it as summer entertainment.
Not too serious. Not
much plot but lots of action.
We’ve
been averaging two calls a day from various stakeholders in the
PeopleSoft/J. D. Edwards/Oracle movie.
Investors. Press.
Other software vendors. Customers.
They all ask the same question:
What do you think is going to happen?
The
real answer is that with so many variables at play, no one can
accurately foretell the outcome.
Recapping recent events:
-
The
Connecticut Attorney General has filed a suit against Oracle.
Connecticut is a recent purchaser of PeopleSoft and they
most certainly do not want the disruption and possible loss they
could incur with a forced change or lessened support.
-
Oracle
has been forced to offer additional reassurances to current
PeopleSoft customers, extending additional offers of continued
availability and support, well beyond their initial intentions.
How is this offered?
Why in the pages of the Wall Street Journal, of course.
Note that the Journal is the one sure beneficiary of this
kind of high-profile activity.
Those ads aren’t cheap!
-
PeopleSoft
made it through the quarter with better than expected numbers by
promising contract-signing customers guarantees of two to five
times their money back should PeopleSoft get sold.
Note how this works; it’s like a poison pill.
As long as PeopleSoft remains intact, they don’t owe
these guarantees; if someone buys them (read: Oracle), the cost
of acquisition goes up as customers choose to exercise these
guarantees, which the buyer must now pay.
-
The
feds entered the picture, deciding to investigate the proposed
Oracle acquisition for antitrust implications.
Since SAP is much larger than Oracle and PeopleSoft
combined would be, this is more likely to delay Oracle than to
ultimately stop them, assuming the PeopleSoft shareholders prove
willing and Oracle decides to ante up the required cash.
-
Last
week, the Wall Street Journal featured a lengthy bio of
little-know Oracle executive vice president Safra Catz, pointing
out that she was the power behind the Oracle move to acquire
PeopleSoft and its timing.
The article characterizes her as tough and well-connected
– she’s the Oracle exec with the closes relationship to
Larry Ellison now that Ray Lane is gone and he may be thinking
of her as the next CEO.
Catz
doesn’t like to pay more for an acquisition than she thinks it’s
worth, but the PeopleSoft acquisition keeps going up in price. Oracle’s already had to put another billion plus into the
pot and the guarantees would be another uncertain (and potentially
large) cost. The WSJ
says she’s the designated bearer of bad news at Oracle, so if the
deal is going to die, she’s probably be the one charged with
making that sound like a good Oracle decision.
Can
we tell the outcome here? Of
course not. We can only
comment:
-
Oracle
still wants PeopleSoft, even if the have to take J.D. Edwards as
part of the bargain, and maybe even with the guarantees.
Maybe Oracle thinks customers just wouldn’t jump ship
so they don’t need to think in terms of paying them out.
-
The
PeopleSoft board still doesn’t want to talk to Oracle.
They just keep scheming to close the J. D. Edwards deal
and making their company too expensive an acquisition, even for
the luxury loving Ellison.
-
The
PeopleSoft shareholders are on hold.
(We know that because the stock price has stopped
moving.) They’d
like to get bought out for lots of money.
They’re just not sure that this is the right time and
company.
But
this entertainment, like summer itself, will come to an end.
And then we’ll know just how much convergence we’re
seeing in this sector of the software business.
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