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Update: PeopleSoft's Conway reiterates plan to fight Oracle takeover

PeopleSoft's CEO held a news conference Thursday to repeat his intention to fight Oracle's takeover. In a call with investors, Larry Ellison promised to keep pursuing PeopleSoft.

PeopleSoft Inc. CEO Craig Conway held a late afternoon conference call Thursday to reiterate his company's intention to fight Oracle Corp.'s hostile bid to take over his company.

In a separate call with investors Thursday, Oracle CEO Larry Ellison said he would continue to pursue PeopleSoft.

Conway refused to answer questions speculating on the impact of the proposed buyout and would only respond to inquiries regarding the unanimous vote by the PeopleSoft Board of Directors to encourage shareholders to reject the Oracle offer. Pleasanton, Calif.-based PeopleSoft publicized its board's decision in a statement released earlier in the day.

PeopleSoft will now submit that decision to the U.S. Securities and Exchange Commission (SEC), as well as file papers forging ahead with plans to acquire Denver-based ERP provider J.D. Edwards & Co., reported the firm's legal counsel.

PeopleSoft also refused comment on its "poison pill" strategy, designed to alter the firm's stock price by issuing more shares in an attempt to derail any hostile takeover.

Conway also stated that Redwood Shores, Calif.-based Oracle's proposed merger would only hurt the enterprise applications market by reducing the number of vendors selling integrated front and back office software suites to two, Oracle and Walfdorf, Germany-based SAP AG. He said Siebel Systems Inc., San Mateo, Calif., exists merely as a "specialist" in the CRM space and does not compete directly with PeopleSoft across its entire business.

Conway said federal antitrust regulators would derail Oracle's deal.

Conway refused to speculate on how the proposed deal might affect PeopleSoft sales in the short term and said that his employees continue to work hard to meet quarterly revenue projections. A number of PeopleSoft customers have contacted the company to express their dissatisfaction over the buyout bid from Oracle, he said.

One company Conway said might benefit from the uncertainty caused by the offer is IBM Corp., Armonk, N.Y., which is a close competitor of Oracle's in the database market.

"It's costly to swap databases, but there is likely an opportunity for IBM to convert some Oracle customers who don't feel this is a good direction to head in," Conway said.

Some PeopleSoft customers are already expressing concerns over completion of the hostile takeover. Jerry Turner, manager of IT services for the city of Boston, which uses PeopleSoft software to run several human resources systems, said a merger would create an atmosphere of uncertainty.

"The merger is definitely something that we're keeping our eye on," said Turner. "I think the people who maintain our PeopleSoft systems would be pretty scared to see this deal happen." Turner said he fears that Boston's current investment in PeopleSoft applications might be threatened by the pending deal.

At least one industry analyst thinks that a PeopleSoft-Oracle merger would negatively impact the CRM market at large. Eric Schmitt, CRM analyst at Cambridge, Mass.-based Forrester Research Inc., said that eliminating PeopleSoft's products from the CRM landscape would only hurt users in the long run.

"It's generally good for buyers and customers to have multiple credible vendors out there, in terms of innovation and selection," said Schmitt. "It would be a shame to see PeopleSoft disappear from an architectural point of view as they've created some fairly elegant applications and built a good technology platform to build on."

However, Schmitt said he does not feel that antitrust regulators would block the takeover if PeopleSoft's shareholders approve it. There are a number of alternatives on the CRM market without PeopleSoft, including SAP, Siebel and Oracle, he said.


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