After surprising Wall Street with a strong second quarter, thanks in large part to its customer assurance program, PeopleSoft Inc. is once again extending the special offer.
Customers who purchase the Pleasanton, Calif., software maker's products are entitled to two to five times their licensing investment back if the company is taken over by rival Oracle Corp. and PeopleSoft's products are discontinued. This time, customers of J.D. Edwards & Co., which PeopleSoft recently acquired, are included in the offer.
"It was a prudent thing to do in the second quarter, and it certainly allowed us to calm some concerns that were out there," said Steve Swasey, PeopleSoft's director of corporate public relations. "It demonstrated to our customers that we were committed to our investment. So we're extending it this quarter. Some of the uncertainty is still out [there] in the marketplace."
The customer assurance program was initiated shortly after Redwood Shores, Calif.-based Oracle launched its surprise takeover bid in June. The program served the dual purpose of providing assurances to customers considering PeopleSoft products and potentially making Oracle's hostile takeover more costly. Swasey placed the potential cost of the program at $391 million. Oracle would have to pay the bill if it acquired PeopleSoft and discontinued its products.
Swasey declined to disclose the number of companies that participated in the program but said PeopleSoft added more than 100 customers and $112 million in licensing revenue in the second quarter.
"It ensures our customers had some protection," Swasey said. "There's no potential exposure or cost to PeopleSoft. If the company remains independent, as we hope it will and as we are focusing on, it remains unnecessary."
The first program ended June 30. Swasey did not offer a timeline for the new offer but said it would be available in the third quarter, which ends Sept. 31.
The program offers refunds of two to five times the cost of a customer's software license fees and is available to anyone who purchases new software modules, Swasey said. The final figure is negotiated on a customer-by-customer basis.
Oracle has extended its tender offer to PeopleSoft shareholders three times, and it now stands at $19.50 per share. Oracle has said it will support and maintain PeopleSoft products longer than PeopleSoft is prepared to, but Oracle says it will offer customers free license swaps if they move over to Oracle software.
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