PeopleSoft's Conway now says Oracle saga not over
CEO Craig Conway blamed Oracle's lingering takeover fight for delayed sales
IDG News Service - At the end of a strong quarter six months ago, PeopleSoft Inc. CEO Craig Conway told analysts that Oracle Corp.'s bid for his company was effectively dead and having no impact on sales. At the end of a weaker quarter, Conway yesterday revised his message and blamed Oracle's lingering takeover campaign for lost and delayed sales.
When Oracle finally backs off, "some amount of deals that have been held or deferred will be released," Conway said in a conference call following PeopleSoft's announcement of its first-quarter financial results. "There will be a release of the dam."
That prediction reverses Conway's statements on PeopleSoft's earnings call in October.
"If customers felt that the Oracle approach was going to go away ... I happen to feel that it wouldn't be a factor either way. I don't think we'd get an acceleration, and I don't think we'd get a deceleration," Conway said at the time. "I think as Q3 has gone on, most customers have felt that the saga is over."
PeopleSoft's first-quarter revenue of $643.1 million fell slightly short of analyst expectations, marking the first time the company has missed estimates since Oracle launched its takeover bid last June. Several large deals closed just after the quarter ended, and PeopleSoft expects business to pick up in coming quarters, Conway said in the conference call.
He also pointed a finger at Oracle. Asked by an analyst how many customers are delaying buying decisions until the takeover tussle is resolved, Conway declined to provide an estimate.
"It's a moving target, but it's always a positive number," he said. "The list continues to grow, but some of those deals can't wait. They close for our competitors."
SAP AG yesterday reported a 45% increase in its U.S. business in the first quarter. Conway cited SAP as PeopleSoft's primary rival and said that while SAP gobbled up U.S. deals, PeopleSoft had a particularly strong quarter in Europe, the Middle East and Africa.
"Somebody is losing market share, and I believe the answer is Oracle," he said.
Still, Oracle's bid continues to suck up PeopleSoft's resources. Though analysts say Oracle has little chance of acquiring PeopleSoft, thanks in large part to an antitakeover provision in PeopleSoft's bylaws known as a poison pill, Oracle has persisted in its $9.4 billion cash offer to PeopleSoft's shareholders for control of the company.
Chief Financial Officer Kevin Parker said PeopleSoft has spent $55 million to date fending off Oracle's advances and will spend another $10 million to $12 million next quarter. Next quarter, PeopleSoft for the first time will exclude the costs of its battle with Oracle from the pro forma calculations on which it asks analysts to base their assessments of the company's finances.
"We've gotten to the point where we've got to make choices between paying our lawyers and trying to run the business," he said. Excluding Oracle-related expenses from PeopleSoft's operating costs will allow the company to devote the necessary resources to development, according to Parker.
Conway said the U.S. Department of Justice's lawsuit to block Oracle's attempted takeover on antitrust grounds has relieved some of the pressure on PeopleSoft.
"We're now regaining the use of our second arm," he said. "We hope the remaining distractions associated with Oracle will be resolved in Q2. Then PeopleSoft will have full use of both arms."
In addition to its poison pill, PeopleSoft has on its side the DOJ's opposition to the deal and the European Commission's trepidation about it. The EC's investigation of the proposed acquisition is currently on hiatus while the organization awaits more information from Oracle, but the commission has already served Oracle with a list of objections.
PeopleSoft may face pressure from its shareholders if its share price doesn't start climbing, however. Shares of PeopleSoft ended trading yesterday on the Nasdaq exchange up 4%, at $18.89, but prices slid in after-hours trading following PeopleSoft's release of its financial report. Oracle is offering $26 in cash per share, a higher price than PeopleSoft's shares have commanded in the past year.
Oracle's Grab For PeopleSoft Special Coverage Page
- 15 Non-Certified IT Skills Growing in Demand
- How 19 Tech Titans Target Healthcare
- Twitter Suffering From Growing Pains (and Facebook Comparisons)
- Agile Comes to Data Integration
- Slideshow: 7 security mistakes people make with their mobile device
- iOS vs. Android: Which is more secure?
- 11 sure signs you've been hacked
- What Datapipe customers need to know about the new PCI DSS 3.0 compliance standard This handy quick reference outlines what PCI DSS 3.0 is, who needs to be compliant and how Alert Logic solutions address the new...
- The 12 PCI DSS 3.0 requirements addressed by Peer 1 Hosting This handy quick reference outlines the 12 PCI DSS 3.0 requirements, who needs to be compliant and how Alert Logic solutions address the...
- Defense Throughout the Vulnerability Life Cycle This whitepaper provides insight into how to leverage threat and log management technologies to protect your IT assets throughout their vulnerability life cycle.
- The Critical Role of Support in Your Enterprise Mobility Management Strategy Most business leaders underestimate the importance of tech support when they choose an EMM solution. Here's what to put on your checklist.
- Live Webcast Best Practices for the Hyperconverged Enterprise Network To the Age of Constant Connectivity and Information overload
- Live Webcast Unmasking the Differences between Consumer and Enterprise File Sync & Share The consumerization of IT combined with the rapid pace of the modern mobile workplace is forcing enterprise IT teams to evaluate file sync...
- Live Webcast Government Agency Webifies Outdated COBOL Applications Let this CTO tell you how his agency converted 1980s-era green screens into an e-filing portal for the 100,000 cases handled each year...
- The New Way to Work Knowledge Vault This Knowledge Vault focuses on how, in today's increasingly virtual world, it's more important than ever to engage deeply with employees, suppliers, partners,...
- Getting Ready for BlackBerry Enterprise Service 10.2 Find out how BlackBerry® Enterprise Service 10 helps organizations address the full spectrum of EMM challenges, while balancing the needs of both the... All Applications White Papers | Webcasts