Welcome!

Open Source Cloud Authors: William Schmarzo, Larry Alton, Shelly Palmer, Mehdi Daoudi, Elizabeth White

Related Topics: Open Source Cloud

Open Source Cloud: Article

Food Fight!! Food Fight!!

Food Fight!! Food Fight!!

Oracle Makes Shock-and-Awe Raid on PeopleSoft, PeopleSoft Rejects Oracle's Hostile Takeover, Oracle Hangs Tough, Whimpering, JDE Sues Oracle for $1.7b

The program for the summer's entertainment was set last Friday when Oracle mounted a surprise $5.1 billion cash raid on PeopleSoft, just four days after PeopleSoft announced that it would buy JD Edwards for $1.7 billion in stock.

Since then the market has bid up PeopleSoft shares, thinking Oracle will eventually better its $16-a-share price. Oracle has starting a tender. The PeopleSoft board has formally rejected Oracle's bid and JD Edwards, whose managers had cut some really sweet termination deals with PeopleSoft according to Oracle's inimitable CEO Larry Ellison, has sued Oracle in both Colorado and California for tortious interference demanding $1.7 billion, the price PeopleSoft would have paid for it, in compensatory damages and some untold amount in punitive damages. It also wants an injunction to stop the tender offer.

The Oracle move knocked USB Warburg - among others - for a loop and forced it to do some quick rethinking. Ultimately it made the Old Testament-style pronouncement - reminiscent of that dream Joseph interpreted - that "Oracle/PeopleSoft will be remembered as a galvanizing moment in tech history whether the deal is completed or not. In 1993 BEL/TCI marked the beginning of the seven-year telecom expansion. We think Oracle/PeopleSoft will mark the beginning of a seven-year consolidation."

Warburg also opined that "The timing of Oracle going hostile is perfect. Boards around the world will be waking up to the deep problems the entire industry faces. Consolidation to date has been virtually non-existent. Those that don't quickly determine their intentions will likely be left without a seat in a few short years."

  When PeopleSoft rejected Oracle Thursday, it followed JDE's earlier lead and - aside from labeling Oracle a spoiler - claimed that an Oracle-PeopleSoft tie-up would never pass antitrust scrutiny in a million years. It said it was anticompetitive and would leave only two players in the enterprise software space with integrated suites - SAP, the leader, and Oracle. 

PeopleSoft claimed that regulatory approval would take ages and - combined with Oracle's stated intention to discontinue PeopleSoft's products - would negatively impact its financial performance. 

Besides, it said in a written statement, "The offer dramatically undervalues the company," suggesting later during a press conference Thursday afternoon that it wasn't interested in Oracle's offer at any price. 

With the Oracle bid "unanimously" rejected by the PeopleSoft board, its CEO Craig Conway said, "From our point of view, this process is at an end."

  His shareholders may of course feel differently and that's what Oracle's counting on.

Larry, amused, wanted to know how PeopleSoft could claim antitrust concerns when last year Conway had offered to buy Oracle's apps. "The only difference," Larry said, "is that his way he would be running the company and my way he won't."

Larry got to offer his perspective because Oracle moved up its fiscal Q4 numbers revelation a week to Thursday evening so Larry could make some telling comparisons between Oracle, PeopleSoft and the proposed PeopleSoft-JDE combine. 

Oracle came in a tiny bit ahead of forecast returning 16 cents a share, up 31% year-over-year, on revenues of $858 million. When it announced its hostile bid for PeopleSoft, it said it would do 14 cents-15 cents. 

The numbers gave Larry the opportunity to point out that Oracle was up 68% while PeopleSoft was off 28% in an up market and that PeopleSoft's new license sales had dropped 39% to $80 million in its latest quarter, while Oracle applications just came in up slightly at $246 million.

  While "PeopleSoft's business is under stress" according to Larry - heck, it's losing accounts like Merrill Lynch to Oracle so Larry can't understand how PeopleSoft CEO Craig Conway can claim "unanimous" support among his customers when "on the face of it it's not true'" or for that matter claim that PeopleSoft has "strong momentum in the market" when it's down 39% - JD Edwards is in "worse shape" and "lost money in its most recent quarter," Larry said, trying to reach out past PeopleSoft's obdurate management to its shareholders and paint a picture of the PeopleSoft-JDE merger - a company down 39% pairing with a company losing money - being a "very risky proposition" - projected to save a mere $80 million in cost cutting when they're combined - compared to the "safer" alternative of Oracle's 16 dollars cash money.

JD Edwards, the company whose future is hanging in the balance and is relatively powerless to influence how the chips fall, slammed Oracle's hostile bid for PeopleSoft first thing Monday, charging that the move was anticompetitive and then followed up Thursday with its twin suits, the one in California naming Ellison and Oracle's brand-new executive VP Chuck Phillips, formerly a Morgan Stanley star analyst, personally. Oracle blew the suits off.

"An Oracle acquisition of PeopleSoft raises such serious antitrust problems that it'll face months of investigation both by the US DOJ and the EC," said JD Edwards CEO Bob Dutkowsky. "I believe there's a high likelihood that one or both agencies may end up blocking the transaction," the same chant PeopleSoft has taken to repeating.

Poor man, he spent eight months negotiating the PeopleSoft merger and was down to trying to spook his audience, largely the 7,000 people who came to JDE's user conference in Denver. Oracle said it would put the acquisition of JD Edwards on hold until it decides whether to pursue it or not and on what terms, doubtlessly dooming JDE to single blessedness.

Dutkowsky claimed an Oracle acquisition of PeopleSoft would reduce customer choice and product support. He was unable to answer a question posed by one of his own clients as why PeopleSoft shareholders should snap their fingers in the face of Oracle's offer. Oracle started the $16 tender offer Monday for PeopleSoft, a modest 6% premium that Larry doesn't seem inclined to up any at this point. 

When last seen, however, PeopleSoft was at $17.37, not quite as heady as it's been in the last few days. It got to $17.90 for a while there on the theory that Larry will have to sweeten the pot to, oh, maybe 20 bucks. On the other hand, the sincerity of Larry's motives and his staying power has been widely suspect.

Larry has said that if Oracle gets PeopleSoft, the PeopleSoft product line will disappear and its customer base shifted to Oracle applications. Dutkowsky claims, "This will leave many customers with greatly diminished options. This harm to customers is exactly what antitrust laws are intended to protect against."

Larry claims customer will actually have more choice under his regime. They'd get to try Oracle apps for free if they wanted, he said, or they could stay on PeopleSoft 7 or move to PeopleSoft 8. Under the PeopleSoft administration the only choice, he said, was going to PeopleSoft 8.

Ellison also said that advanced features in PeopleSoft products would be sucked up into future versions of Oracle's eBusiness Suite, how and when is altogether unclear.

Oracle's migration plans kills competitive products, eliminates the integration risks involved in big acquisitions, which Oracle is unused to, and gives its struggling eBusiness Suite a fillip. It probably should be noted that lots of PeopleSoft and JD Edwards customers are on IBM platforms, and so Oracle gets to take a swipe at IBM too.

In contrast Dutkowsky contends that PeopleSoft's acquisition of JD Edwards would increase customer choice since both product lines would be kept going.

A highly irritated Craig Conway, a former Oracle employee, has raised the tenor of the conversation this week to name-calling, characterizing Oracle's tender offer as "atrociously bad behavior from a company with a history of atrociously bad behavior."

  He likened Ellison to Genghis Khan, who raped and pillaged his way across Asia to create an empire that stretched from the Pacific to the Black Sea, and called him a "sociopath" and his offer "diabolical." He questioned Ellison's "integrity, honesty and ethics."

JDE CFO Rick Allen said Oracle merely meant to disrupt the JDE acquisition.

By law, Conway and his board have to review all cash tenders irrespective of intent. Conway threatened to sue Oracle seeking a temporary restraining order. Late Tuesday he changed his mind and called the lawyers off. PeopleSoft didn't explain itself, but it's thought it was trying to avoid getting sued by stockholders anxious to see if Oracle would sweeten the deal. 

The big question has been whether Ellison intends to go through with the acquisition or is just trying to torpedo the PeopleSoft-JDE deal and cause confusion among their existing and potential customers. People won't sign because of the uncertainty; Gartner, for instance, is advising its clients to hold off finalizing any deals with either PeopleSoft or JD Edwards until the haze lifts. That put the companies in a revenue bind.

Not only is this the second time Oracle has toyed with acquiring at least parts of PeopleSoft or selling its dicey apps to PeopleSoft or putting them together in a separate company, Oracle has also considered buying Siebel, according to the Wall Street Journal, and evaluated buying JDE itself, making a call right before the PeopleSoft-JDE definitive agreement went down. 

USB Warburg admits that it's conceivable that "Larry Ellison is just having fun annoying PeopleSoft's CEO Craig Conway and will go away in a week and we will all forget the whole matter like it was a bad dream." But it doesn't think so. 

"At the bare minimum," it says, "this deal syncs with Larry Ellison's view of a consolidated industry that follows the end of the 1990s fairy tale. It fits with his vision of what the world will look like. Additionally, he just brought on Chuck Phillips as a strategist. Would Chuck have moved over to simply torture folks like Craig Conway for a few days, or does he have a vision he is set on creating? And if so, does that vision probably sync with Larry Ellison's own?" 

It says, "We think this deal is not gonna close quickly, and the odds of Larry Ellison quickly walking away are remote."

Oracle also doesn't have the cash hoard of a Microsoft. As of a few days ago, it had only $6.6 billion in the bank. However, it's gotten a commitment for a $5.1 billion revolving credit facility from Credit Suisse First Boston. It would also be buying PeopleSoft's $2 billion bank account.

By Oracle's calculations, a PeopleSoft acquisition would increase its EPS in the first combined quarter. Prudential reckons Oracle plus PeopleSoft would have 23% of the market to SAP's overwhelming 59%. Oracle figures SAP's ERP lead would satisfy regulators.

It all depends on how they define the market. Oracle has filed for Hart-Scott-Rodino review. The FTC and the Justice Department will flip for who gets to do it.

The Oracle tender theoretically runs until July 7.

Dutkowsky said the breakup fee is something like 3.25% of the value of the deal. The Wall Street Journal mentions Microsoft as a possible white knight (probably unlikely) as well as IBM (but only if it changes its no-apps policy).  If Oracle really does the PeopleSoft deal, Microsoft and its applications interests are seen as its real rival. At least Microsoft thinks so and Oracle said so.

Linuxgram is published weekly by G2 Computer Intelligence Inc.

www.g2news.com 323 Glen Cove Ave.; Sea Cliff, NY 11579, USA;
Tel: 516 759-7025 - Fax: 516 759-7028

Send press releases to: [email protected]

More Stories By Maureen O'Gara

Maureen O'Gara the most read technology reporter for the past 20 years, is the Cloud Computing and Virtualization News Desk editor of SYS-CON Media. She is the publisher of famous "Billygrams" and the editor-in-chief of "Client/Server News" for more than a decade. One of the most respected technology reporters in the business, Maureen can be reached by email at maureen(at)sys-con.com or paperboy(at)g2news.com, and by phone at 516 759-7025. Twitter: @MaureenOGara

Comments (1) View Comments

Share your thoughts on this story.

Add your comment
You must be signed in to add a comment. Sign-in | Register

In accordance with our Comment Policy, we encourage comments that are on topic, relevant and to-the-point. We will remove comments that include profanity, personal attacks, racial slurs, threats of violence, or other inappropriate material that violates our Terms and Conditions, and will block users who make repeated violations. We ask all readers to expect diversity of opinion and to treat one another with dignity and respect.


Most Recent Comments
Kevin 06/15/03 01:24:00 PM EDT

Oracle's App Server is pathetic. I've used it and it rots compared to BEAS and IBM. Others such as Sybase and Macromedia's perform better and gives you a competitive cost advantage compared to implementing Oracle's infrastructure. This deal shows how feable Oracle has been in getting a large penetration into the App Server market. Check out www.theserverside.com for more details.

@ThingsExpo Stories
SYS-CON Events announced today that SIGMA Corporation will exhibit at the Japan External Trade Organization (JETRO) Pavilion at SYS-CON's 21st International Cloud Expo®, which will take place on Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. uLaser flow inspection device from the Japanese top share to Global Standard! Then, make the best use of data to flip to next page. For more information, visit http://www.sigma-k.co.jp/en/.
SYS-CON Events announced today that Keisoku Research Consultant Co. will exhibit at the Japan External Trade Organization (JETRO) Pavilion at SYS-CON's 21st International Cloud Expo®, which will take place on Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. Keisoku Research Consultant, Co. offers research and consulting in a wide range of civil engineering-related fields from information construction to preservation of cultural properties. For more information, vi...
SYS-CON Events announced today that NetApp has been named “Bronze Sponsor” of SYS-CON's 21st International Cloud Expo®, which will take place on Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. NetApp is the data authority for hybrid cloud. NetApp provides a full range of hybrid cloud data services that simplify management of applications and data across cloud and on-premises environments to accelerate digital transformation. Together with their partners, NetApp em...
SYS-CON Events announced today that N3N will exhibit at SYS-CON's @ThingsExpo, which will take place on Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. N3N’s solutions increase the effectiveness of operations and control centers, increase the value of IoT investments, and facilitate real-time operational decision making. N3N enables operations teams with a four dimensional digital “big board” that consolidates real-time live video feeds alongside IoT sensor data a...
WebRTC is great technology to build your own communication tools. It will be even more exciting experience it with advanced devices, such as a 360 Camera, 360 microphone, and a depth sensor camera. In his session at @ThingsExpo, Masashi Ganeko, a manager at INFOCOM Corporation, will introduce two experimental projects from his team and what they learned from them. "Shotoku Tamago" uses the robot audition software HARK to track speakers in 360 video of a remote party. "Virtual Teleport" uses a mu...
Internet of @ThingsExpo, taking place October 31 - November 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA, is co-located with 21st Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry players in the world. The Internet of Things (IoT) is the most profound change in personal and enterprise IT since the creation of the Worldwide Web more than 20 years ago. All major researchers estimate there will be tens of billions devic...
Mobile device usage has increased exponentially during the past several years, as consumers rely on handhelds for everything from news and weather to banking and purchases. What can we expect in the next few years? The way in which we interact with our devices will fundamentally change, as businesses leverage Artificial Intelligence. We already see this taking shape as businesses leverage AI for cost savings and customer responsiveness. This trend will continue, as AI is used for more sophistica...
SYS-CON Events announced today that SourceForge has been named “Media Sponsor” of SYS-CON's 21st International Cloud Expo, which will take place on Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. SourceForge is the largest, most trusted destination for Open Source Software development, collaboration, discovery and download on the web serving over 32 million viewers, 150 million downloads and over 460,000 active development projects each and every month.
SYS-CON Events announced today that DXWorldExpo has been named “Global Sponsor” of SYS-CON's 21st International Cloud Expo, which will take place on Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. Digital Transformation is the key issue driving the global enterprise IT business. Digital Transformation is most prominent among Global 2000 enterprises and government institutions.
Real IoT production deployments running at scale are collecting sensor data from hundreds / thousands / millions of devices. The goal is to take business-critical actions on the real-time data and find insights from stored datasets. In his session at @ThingsExpo, John Walicki, Watson IoT Developer Advocate at IBM Cloud, will provide a fast-paced developer journey that follows the IoT sensor data from generation, to edge gateway, to edge analytics, to encryption, to the IBM Bluemix cloud, to Wa...
There is huge complexity in implementing a successful digital business that requires efficient on-premise and cloud back-end infrastructure, IT and Internet of Things (IoT) data, analytics, Machine Learning, Artificial Intelligence (AI) and Digital Applications. In the data center alone, there are physical and virtual infrastructures, multiple operating systems, multiple applications and new and emerging business and technological paradigms such as cloud computing and XaaS. And then there are pe...
SYS-CON Events announced today that B2Cloud will exhibit at SYS-CON's 21st International Cloud Expo®, which will take place on Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. B2Cloud specializes in IoT devices for preventive and predictive maintenance in any kind of equipment retrieving data like Energy consumption, working time, temperature, humidity, pressure, etc.
DevOps at Cloud Expo – being held October 31 - November 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA – announces that its Call for Papers is open. Born out of proven success in agile development, cloud computing, and process automation, DevOps is a macro trend you cannot afford to miss. From showcase success stories from early adopters and web-scale businesses, DevOps is expanding to organizations of all sizes, including the world's largest enterprises – and delivering real r...
SYS-CON Events announced today that Massive Networks, that helps your business operate seamlessly with fast, reliable, and secure internet and network solutions, has been named "Exhibitor" of SYS-CON's 21st International Cloud Expo ®, which will take place on Oct 31 - Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. As a premier telecommunications provider, Massive Networks is headquartered out of Louisville, Colorado. With years of experience under their belt, their team of...
SYS-CON Events announced today that Suzuki Inc. will exhibit at the Japan External Trade Organization (JETRO) Pavilion at SYS-CON's 21st International Cloud Expo®, which will take place on Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. Suzuki Inc. is a semiconductor-related business, including sales of consuming parts, parts repair, and maintenance for semiconductor manufacturing machines, etc. It is also a health care business providing experimental research for...
SYS-CON Events announced today that Fusic will exhibit at the Japan External Trade Organization (JETRO) Pavilion at SYS-CON's 21st International Cloud Expo®, which will take place on Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. Fusic Co. provides mocks as virtual IoT devices. You can customize mocks, and get any amount of data at any time in your test. For more information, visit https://fusic.co.jp/english/.
SYS-CON Events announced today that Ryobi Systems will exhibit at the Japan External Trade Organization (JETRO) Pavilion at SYS-CON's 21st International Cloud Expo®, which will take place on Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. Ryobi Systems Co., Ltd., as an information service company, specialized in business support for local governments and medical industry. We are challenging to achive the precision farming with AI. For more information, visit http:...
SYS-CON Events announced today that Daiya Industry will exhibit at the Japan External Trade Organization (JETRO) Pavilion at SYS-CON's 21st International Cloud Expo®, which will take place on Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. Daiya Industry specializes in orthotic support systems and assistive devices with pneumatic artificial muscles in order to contribute to an extended healthy life expectancy. For more information, please visit https://www.daiyak...
SYS-CON Events announced today that Interface Corporation will exhibit at the Japan External Trade Organization (JETRO) Pavilion at SYS-CON's 21st International Cloud Expo®, which will take place on Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. Interface Corporation is a company developing, manufacturing and marketing high quality and wide variety of industrial computers and interface modules such as PCIs and PCI express. For more information, visit http://www.i...
SYS-CON Events announced today that Mobile Create USA will exhibit at the Japan External Trade Organization (JETRO) Pavilion at SYS-CON's 21st International Cloud Expo®, which will take place on Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. Mobile Create USA Inc. is an MVNO-based business model that uses portable communication devices and cellular-based infrastructure in the development, sales, operation and mobile communications systems incorporating GPS capabi...