Oracle's Hostile Takeover Bid For PeopleSoft

rkuris writes "Oracle has launched a 5.1 billion dollar cash hostle takeover bid against Peoplesoft. PeopleSoft's CEO Craig Conway (a former top executive for Oracle) called Oracle's offer 'atrociously bad behavior from a company with a history of atrociously bad behavior.' 'Obviously it is a transparent attempt to disrupt the [1.7 billion dollar friendly] acquisition of J.D. Edwards by PeopleSoft announced earlier this week.' The week's events have reopened old wounds between the companies, which have a history of hostility and name calling."

if I had PeopleSoft stock

[the_2nd_coming]

I would sure as hell be selling it to Oracle.

how could anyone but a Zelot pass up that offer?

Quality of Work Environment at Oracle & People

[reporter]

The key quote in the article, "PeopleSoft calls Oracle bid 'atrocious' [com.com]", is the following.

The corporate cultures of Oracle and PeopleSoft couldn't be farther apart, according to some former employees. Oracle is a haven for aggressive personalities who thrive on intense competition. To motivate the sales staff, managers have posted an individual's progress in achieving his or her sales goals on the wall during quarterly meetings. The competitive atmosphere leads to routine reorganizations. By contrast, PeopleSoft, founded by a Cornell University graduate, Dave Duffield, projects a Hewlett Packard-like image of being more collegial. The sales staff often relies on customer recommedations to complete a deal. To some extent, this was necessary because the applications market had already been well established by Oracle and SAP by the time PeopleSoft emerged.

Instead of looking at this acquisition from a purely rational, coldly analytical perspective, we should and must begin to look at the quality of the lives of the employees. I would prefer to work for an organization like PeopleSoft. It is an organization that cares.

Oracle is cut from the same cloth as Sun, Siebel, and Cisco. Brutal, cut-throat, survival of the fittest. Increasingly, with the influx of H-1B's and "free" trade, American companies are becoming the ruthless of ogres of the early part of the 20th century. Most of my American colleagues do not want an America where employees are savaged. We gladly accept a small reduction of economic expansion in exchange for a kindler and gentler American workplace and society.

It is this kindler and gentler America that has drawn tens of millions of immigrants to this country.

We shareholders should oppose this hostile takeover and send Larry Ellison back to the Orient that he so admires.

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[account_deleted]

Comment removed based on user account deletion

Impact on SAP/MySQL deal

[wareadams]

I've been wondering what this would mean for the MySQL/SAP deal announced a week or so ago.

To date SAP has wanted to be agnostic to the underlying database that their software runs on, so you could view the MySQL deal as a nice headline but not really something that was going to have SAP's salesforce pushing MySQL into enterprise customers.... They'd be just as happy if those customers ran Oracle as long as they ran SAP on top of it.

However, if Oracle owns PeopleSoft they suddenly become SAP's largest competitor. As soon as that happens a major SAP infrastructure provider is now the enemy, and SAP might suddenly have reason to push another solution vs. allowing the customer to choose. After the deal with MySQL that solution might well be MySQL.

Company for Sale

[Arandir]

When you offer your company for sale, you have only yourself to blame when someone makes a bid to buy it. And offering your company for sale is exactly what you're doing when you issue stock.

I have no sympathy for companies that want to be publicly traded corporations but then pretend that they're a private firm.

Re:Oracle is the good guy

[Morky]

Have you any idea what it takes to install an ERP? Imagine you've been working on a PeopleSoft installation for the past 10 months. You spend most of your day, every day, in a room of consultants and key users trying to figure out how to make the thing work for your business. You're almost there, just a few more data conversion issues to deal with. You expect this system to run the business for the next 10 years. Now imagine a company buys your ERP vendor and says it will discontinue the product you've been spending millions on installing. Oracle is not the good guy here. Less choice=bad.

Re:Quality of Work Environment at Oracle & Peo

[bug506]

The problem with this quote is that it refers to the sales force.

As a developer in the server technologies division of Oracle, I'd have to say that I don't see the "intense competition" that is mentioned. Within my group of about 50-100 (that is, all of the people below the closest VP), there is a true spirit of cooperation. If I have a problem with a specific line of code or a new technology I am learning, there are many other people on the team who are willing to help (just as I am willing to help them), even if they are not working on the same project as me. I know it sounds idealistic, but that's what the real situation is in development.

This cooperation even extends to the H-1Bs, and all of the other recent immigrants with whom I work. I'm one of the few people in my group that was born in America and speaks English natively. However, I look at having this diversity in the group as a positive and not a negative as it brings different viewpoints to technical discussions and makes non-technical discussions a little more interesting.

Now, sometimes there is a level of competition between teams, as each team thinks it knows the best approach to a given problem. But that is healthy, and it forces a detailed refinement of the approaches so that the "higher ups" can make a decision regarding which approach is most appropriate.

So, I can't speak for the sales force, but I don't know if the development cultures are as different as the quote suggests.

Re:Oracle is the good guy

[Anonymous Coward]

You can deal with the world the way it exists, or you can dream. PeopleSoft is a prime target for takeover. Would you rather Bill Gates grab it? In the world we live in, Oracle is a very good alternative. Consolidation and takeovers are now a fact of life. About all you can do is hope for the best. In this case, Oracle looks pretty darned good.

Re:$5.1bn ?

[TopShelf]

Oracle's got the dough, as you'll see here [yahoo.com]. With $1.15 cash in hand per share, at 5.24 Billion shares outstanding, that's around the $6 billion mark right there. A large portion of this purchase could be made in Oracle stock or by arranging a loan (the technique made famous in the 80's, the Leveraged BuyOut or LBO) as well, reducing the need for cash.

Either way, this story is only just beginning. Analysts portend a consolidation wave coming in the software field. Also consider that Oracle's standing offer amounts to $16 per share of Peoplesoft, but the stock price on Friday closed at $17.82. That means the folks who know best (investment bankers, merger arbitragers) see this as the first step in a longer auction process.

Better not wake the Giant.

[LibertineR]

PeopleSoft runs mostly on Microsoft Servers. The thought of losing a potential revenue stream might cause Ballmer to dip into petty cash and settle this argument overnight. Oracle is not going to integrate PeopleSoft; they are buying a customer list and less competition, in addition to kicking a few more thousand geeks to the curb.

Microsoft could pick them up, keep them as a separate line of business, with management autonomy and shareholders would go for that in a heartbeat. This could turn out to be a very bad move by Oracle. If Microsoft so mch as raised an eyebrow, Oracle stock goes down, making the aquisition more expensive even if Microsoft doesnt play. I see a lot of ways that Oracle could end up regretting this big time.

Re:How would this affect linux?

[johnpelster]

According to this article [forbes.com], PeopleSoft is already to jump on the Linux bandwagon...

As far as the cussing associated with PeopleSoft, I am very sympathetic. :) But, as someone who has worked with both PeopleSoft and Oracle's ERP suite, I can safely say that there is plenty of swearing going on thanks to Oracle.

The implementation makes all the difference... Both can be great application, or huge headaches depending on how they are done.

Re:Oracle is the good guy

[Kunta Kinte]

Oracle is using its cash on hand to cannibalize another company, steal its customer list, terminate development of its products, lay off 8000 tech workers, and turn Silicon Valley into even more of a smoking crater than they have already by outsourcing so much of their own development work to the Third World.

...But in doing so Oracle manages to dominate the global multi-billion dollar CRM/ERP/Business Services market and increases in size, unseating the German company SAP and brings in millions to its American shareholders and creating new American jobs.

We should not protect 'weaker' players in this competitive market. Doing so benefits neither them or the consumer. If PeopleSoft can not fend of Oracle, it would be beneficial for their stockholders to take the money.

Here's something to think about, the Oracle offer may be a cheap move by Oracle, it may also be a symptom of PeopleSoft's vulnerability.

Re:Impact on SAP/MySQL deal

[Anonymous Coward]

Actually Oracle is a R/3 competitor. Oracle sells a lot more than just database engines...

The whole reason SAP got into SAPDB was because of what you describe. They just realized it wasn't worth the fight.

Perhaps the database market just isn't ready for another big player. Oracle, Microsoft, IBM... that is pretty much enough choice for the people willing to pay. As an open source project, it SAPDB just wasn't that clean of a code base. Very old...

Both Companies Products suck

[nurb432]

From working with both companies owith their 'erp' applications, neither is anything to write home about.

Both were poorly managed, *not* user friendly and had MAJOR cost over-runs. ( in our case in the millions of dollars, mainly due to overselling on their part that borderlined on fraud in oracles case ), not to mention techincal issues right and left.

Having them both under one roof .. eeek.

Disclaimer, oracle project was 5 years ago, they might have improved since then, but i doubt it )

What I can say is..

[marcushnk]

I've used and managed an AS400 with JDE for the past 3.5 years.. and although I don't like the product I have respect for it..

And I've had dealings with Oracles management..

these guys do not fsck around.

They are a VERY driven, powerful bunch of people who get what they want, and get it because they ain't afraid of stepping on toes.

JDE needs to watch their step, cause these guys won't give up easily.

Re:Consolidation of bad software?

[Anonymous Coward]

The company I work has recently decided to drop Oracle Applications (10.7) and move to JD Edwards. It would be ironic to spend all this money on a business system change only to us back where we started. It seems like Oracle probably won't succeed with the manuever, but it's fun to speculate.
As for the quality of the apps, I've learned two important things:
1. There's no magic bullet. Don't expect a generic business system solve your needs.
2. Consultants are evil (usually). Don't let consultants completely handle your implementation. Give the knowledge to your employees.
I've only used Oracle Apps and custom mainframe business solutions before, but I bet this holds across most if not all of the ERP solutions out there: Some things are done well, some things are done poorly. You still have to make changes to the system to meet your needs.

Sun didn't "provide" StarOffice.

[Ayanami Rei]

They acquired it by buying a German company (StarDivision) [undp.org]at a good price, and made a few improvements.

Hopefully this will go through.

[offpath3]

People-soft is absolutely horrible. They took over a bunch of stuff at my school for handing checking grades, signing up for classes, etc, and there's been nothing but complaints. Their system is absolutely horrible and has all kinds of annoying restrictions placed on it. There's nothing like 13,000 people trying to sign up for classes or grades at the same time, but only 50 people are allowed to log on at once! Maybe Oracle can fix up such a poor excuse for a company.

Re:I am

[stefanlasiewski]

A PeopleSoft employee, and I can tell you that we aren't selling to Oracle.


Unfortunately, it's out of your control. Even Craig Conway has limited control over what will happen, the choice belongs to the stockholders. If Oracle can buy > 50% of the stock, Conway is gone.

But good luck to you.

Re:Quality of Work Environment at Oracle & Peo

[Gojira Shipi-Taro]

You're assuming that employee loyalty has no value. I work for a company that looks at the bottom line. They know that if they treat their employees like shit, the bottom line will fall out.

No One that I know wants to work for an Oracle-type company. What Oracle is doing isn't preserving the bottom line. It's giving Larry Ellison something to jerk off over when he thinks about the life-and-death hold he has over so many talented people.

Side note for Oracle style management:

If you treat employees like that, if you try to annihilate their careers if they don't win in the yearly June pit-bull fights, expect more than a few of them to decide they don't give a shit about your NDAs and Noncompetes.

You get what you give.

Re:Quality of Work Environment at Oracle & Peo

[Imperator]

It is this kindler and gentler America that has drawn tens of millions of immigrants to this country.

I doubt this. Most immigrants in the past century have come because they could get a higher standard of living in America, or because they were seeking asylum from some sort of persecution. Compared to Western Europe, America is hardly kind and gentle. There are relatively few laws on employment here, which keeps minimum wage, job security, and workers' rights low. If you come to America for economic reasons, it's usually for the money, not for the work conditions.

Re:I am

[Anonymous Coward]

Of course, Conway will say that he won't allow the hostile take-over. He will be out of a job too.

Yes, Oracle offers $16 a share is lower than the current market prcie. However, it is just the beginning of a long take-over process. Who knows what will happen later. For example, PS price will stumble when Wall Street wants to take profit. Or, Ellison will sweeten the deal.

In regards to J.D. Edwards, it will not probably not part of the Oracle take over deal. So, J.D. Edwards may be the real loser.

Re:Impact on SAP/MySQL deal

[ces]

Well, MySQL is a triple-threat -- simplicity, stability, speed. It's easier than Oracle, it "just works" and keeps working, and it returns results just as fast as Oracle does, even under heavy load. We recently had MySQL processing 169 queries per second (Sun E450, running Apache, MySQL, and PHP) during our peak time, and while the site was slower than off-peak times, it was still responsive and enjoyable to use. Some people just don't need the high-end features -- or more to the point, for some people, the "high-end" features are stability & speed.

ERP, CRM, and HR application suites such as PeopleSoft, Oracle, SAP, and JD Edwards sell are one of the major drivers of those "high-end" features you so casually handwave away.

MySQL is good in its place but it doesn't currently have the features to support mission-critical applications. Things like the supply chain management system for GM, account management for Bank of America, or even the student record system for UCB have very little tolerance for downtime or record corruption.

Go ahead and try implementing a major business application for a global 1000 company on MySQL, but please let us know who was stupid enough to do this so we can short their stock.

Before you go spouting off about how MySQL is just as good as Oracle or DB2 next time please learn something about transaction processing and real back-end enterprise applications.

If Oracle wins they will lose...

[jordandeamattson]

The reality is that Oracle and Peoplesoft have culturals as different as two companies can possibly be. Oracle is of the chewing them up and spit them out school. If Oracle has a soul, it is a very dark one. On the other hand, Peoplesoft has a soul and it is a soul which - how every imperfectly - trys to care for the employees while still calling forth the best from its employees.

If Oracle were to make this hostile bid come to fruition, the majority of Peoplesoft employees would be heading for the door as quickly as possible. The end result would be a pile of IP in Oracle's hands, but not any of the people that can take that IP and extend it and bring value from it.

Of course, the Larry Ellison isn't going to see it that way. Rather, he is seeing that I can take these two pieces and put them together and they will work the way that I anticipate. Why? Because everyone works the way he expects - or he gets rid of them, the list of folks that have bailed out of Oracle due to Larry is very long - and that is just the way it will work out in his world. He isn't going to think about culturally compatibility. But then again that is true of most CEOs trying to build empires. Why do you think that most mergers end up being failures?

Actually.

[juuri]

You had best start looking anyways, regardless if the bid goes through or not the additional information the mass business public has gleaned on the purchase of JDE is going to severely tarnish PeopleSoft. You guys will now work REALLY hard to make sales because people are going to be iffy on your future. After the of JDE aquisition you won't be #2 for long if you are even are when the merger is completely done. Oracle has been really smart with this, it is win-win for them.

Re:Quality of Work Environment at Oracle & Peo

[Bull999999]

"a) Start your own damn company and be nice to everybody. That's the beauty of capitalism."

I agree with you(ektor) 100%. It only costs $50 to start a corporation in Colorado. It may cost more or less in other states but not by much.

"We gladly accept a small reduction of economic expansion in exchange for a kindler and gentler American workplace and society."

If that's the case, start a corporation with the motto "Our first priority is kindler and gentler American workplace and society, not profits."

Since you(not ektor) believe that most of the Americans have same belief as you do, you shouldn't have problems finding investors. And even if your product costs more than your less friendly competitor, you can bet that the people will choose your product because most of them believes in your corporation's motto. I hereby put my Foolproof Idealist Business Plan(TM) on public domain so you don't have to pay me a cent if you become million/billionaire from it.

Re:Some bad, some bad

[smallpaul]

I always laugh when I hear people say they feel safer with a corporate product because there is a company behind it with the incentive to keep improving it. They've got it exactly backwards. The minute there is no more profit in a product, or the minute it becomes strategic to tie it or bundle it with something else a company will do that. An open source product can continue to advance as long as a single person cares about it.