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PeopleSoft CEO Maintains Stance

Craig Conway says the ruling in Oracle's favor doesn't mean there has to be an acquisition.

September 22, 2004|Joseph Menn | Times Staff Writer

SAN FRANCISCO — The chief executive of PeopleSoft Inc. told thousands of customers Tuesday that Oracle Corp.'s hostile takeover attempt was like a "bad dream," drawing support from the crowd with a defiant stance.

In his first public speech since Oracle won a federal court's blessing to continue its 15-month-old tender offer, Craig Conway appeared steadfast in his resistance before 15,000 customers and business partners.

"Have you ever had a bad dream that just wouldn't seem to end? We have," Conway said. After he declared that the antitrust ruling in Oracle's favor didn't mean PeopleSoft would be acquired by the database giant, the crowd interrupted Conway with applause.

The former Oracle executive then listed the obstacles that remain in front of Oracle: the possibility of an appeal by the U.S. Justice Department, a continuing European Commission antitrust inquiry, PeopleSoft's "poison pill" takeover defense and its lawsuit against Oracle alleging unfair business practices, scheduled for trial in January.

PeopleSoft hasn't publicly responded to Redwood City, Calif.-based Oracle's request for talks over the $7.7-billion cash offer. And not much more has been happening in private: A person close to Pleasanton, Calif.-based PeopleSoft said, "PeopleSoft is not for sale."

A committee of independent board directors, not Conway, is making decisions related to Oracle's offer. That group is believed to be more concerned about the appropriate price in any sale. PeopleSoft has said Oracle's offer of $21 a share is too low.

Although investors have been calling for new negotiations toward a friendly deal -- an outcome some financial analysts see as a foregone conclusion -- many of the customers on hand Tuesday were delighted by the tough stance.

"I was happy to see Craig optimistic and fighting," said Barbara Peck, vice president of information systems at Gate Petroleum, which owns a chain of gas stations. Like others at the conference, Peck said she was concerned that Oracle would drop future development of and support for her PeopleSoft personnel management and financial programs.

Some also took solace from PeopleSoft's official news of the day -- a tighter alliance with IBM Corp. Under that tentative deal, PeopleSoft would use some IBM software in its products, each company would recommend the other's gear on sales calls, and hundreds of programmers would work on joint offerings and improved compatibility.

The public terms of the alliance were vague, analysts said. But IBM had felt threatened by the prospect of a combined Oracle and PeopleSoft, according to documents submitted in the antitrust trial. Some PeopleSoft customers said they hoped Tuesday's deal could lead to the computer giant emerging as a white knight bidding for PeopleSoft ownership.

PeopleSoft software runs on top of databases made by both IBM and Oracle. IBM fears that Oracle, its chief database rival, would sell PeopleSoft programs only for Oracle databases.

IBM Senior Vice President Steve Mills said there was no hidden meaning to the agreement, which had been in the works before Oracle won its court case.

"What you see is what you get," Mills said.

PeopleSoft shares, which have been trading mainly on acquisition speculation, rose 4 cents to $19.36. Oracle gained a penny to close at $11.41. Both trade on Nasdaq.

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