Time for PeopleSoft Directors to Admit Defeat

  • Mercury News: Oracle wins backing of 61% in PeopleSoft offer. PeopleSoft’s board has shown no signs of backing down from its opposition to the $24-a-share deal, putting it on the controversial path of defying the will of a majority of its shareholders. Oracle still faces a PeopleSoft “poison pill” plan designed to flood the market with PeopleSoft shares, making it prohibitively expensive for a hostile acquirer to close a deal.

  • It’s time for the PeopleSoft board to make the deal. Maybe the current offer of $24 a share is too low; certainly Oracle could go higher, and probably will.

    But the continued opposition even to a serious discussion should end. The shareholders have spoken, loudly. They are willing to see a deal at the right price — and it’s obviously not too distant from the one Oracle has offered.

    If the board continues to block this deal, it will be mocking shareholder wishes. Of course, that’s nothing new in today’s corporate world.


    Posted by: on November 20, 2004 07:56 AM

    Well, as both a PeopleSoft and an Oracle customer, I can assure you that this is a deal that PeopleSoft’s customers do NOT want to see happen. Whenever CA buys a company, we immediately drop the software we were considering and plan to migrate from whatever we are using. Oracle’s not that bad, but we don’t want any more of their stuff than we already have. They are a horrible company to deal with.

    Posted by: Seun Osewa on November 20, 2004 03:29 PM

    This is definitely bad news, of course. How did they pull if off? It only goes to show that investors in public companies are not investors in the full sense of the world. The stock system is flawed; the only way to get a return on investment in stock is to sell it at a higher price. Unfortunately, the price depends directly on public perception of the company and stock market dynamics, not really the performance per se.

    Posted by: Mark Cianca on November 20, 2004 03:55 PM

    This isn’t an issue that is as black and white as you present it, Dan. If the only responsibility a board shares is for fiduciary gain on behalf of its stockholders, then the company owes no debt to the public good or its customers. I doubt that’s where you’re headed with this.

    I work for a major research university in the Bay Area. We have just completed an implementation of a suite of PeopleSoft’s products.

    Projects like the one we’ve just completed occur only once or twice in a person’s career. Why? Because the cost of such a venture requires that we determine that the project and the benefits it promises to deliver are sound. In the end, major software implementations are undertaken to create capacity and manage risk. We derive no other ROI or tax benefit from such a venture.

    I know what it took for our institution to make the decision. Such a decision wasn’t taken lightly; nor was it made with any haste. The cost of failure in a public institution is simply too high.

    My institution licenses some Oracle products. We do so based on internal standards and risk management. However those licenses come from Oracle’s database products. Database products have been and remain Oracles core competency. The company’s current stock value certainly doesn’t reflect its skill as an applications vendor…

    Ellison’s desire to acquire PeopleSoft continues a move his company has taken away from its core competencies. It is a move that is motivated not by the good of his customers or the good of PeopleSoft’s customers. From my perspective, it is merely a byproduct of greed and avarice.

    I do not trust Oracle. I have done business with them too much to ever have faith in their sales teams or the Ellison lieutenants who push their sales staff into business tactics that are at best uncomfortable for the customer, and at worst of questionable ethics.

    As a PeopleSoft customer, I feel that the board is the only group looking out for the customer base. From your perspective, PeopleSoft’s board is mocking its shareholders. From mine, they are currently acting as the sole voice of the customer base.

    To my knowledge, Larry Ellison has never been hailed as a champion of his customers. For public sector customers like us, this deal remains a bitter black cloud.

    Posted by: Dan Gillmor on November 20, 2004 05:24 PM

    I don’t disupte that this will be bad for PeopleSoft customers. But the shareholders own the company, not the customers. As corporate law works today, the board has far, far more obligation to the shareholders than any other constituency. I’d like to change that, but it’s reality.

    Posted by: on November 21, 2004 02:58 PM

    To potentially avoid situations like this in the future, it would seem that companies should consider purchasing stock of the companies they buy product from (at least the big investments). That way, they at least would have some say (depending on how much stock was owned) in the future direction of the company. If you’re making a $5-10 milllion investment in a company’s product, what’s another 250k one way or the other over time?

    Posted by: Seun Osewa on November 21, 2004 03:22 PM

    Jojo, if you don’t own enough of the stock you don’t have any control over the company

    Posted by: on November 21, 2004 07:37 PM

    Yes, I know that. What I was thinking was that if all the companies that brought the product also brought stock, together, they might have enough to have some influence, if not complete control.

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