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Posted on Thu, Jul. 10, 2003
CEO firm on bid for PeopleSoft

Mercury News

Oracle Chief Executive Larry Ellison said Thursday he is committed to acquiring PeopleSoft and signaled that he is willing to wait months if necessary to succeed in his hostile takeover bid.

In an hourlong, question-and-answer session with financial analysts, Ellison was at times analytical, defensive, funny and sarcastic. He hurled barbs at competitors, shared his views on the future of the software industry and sought to clarify his intentions toward PeopleSoft. Ellison's remarks at Oracle's annual analysts' day, held at the company's Redwood Shores headquarters, provided some verbal fireworks after a series of sober presentations by top executives.

With PeopleSoft possibly closing its own $1.75 billion merger with J.D. Edwards of Denver as early as next week, speculation has raged in recent days that Oracle's $6.3 billion bid for PeopleSoft could be thwarted. But while Ellison and other Oracle executives wouldn't specify how the J.D. Edwards deal would affect their own bid, they made it clear they were willing to consider leaving their offer for PeopleSoft on the table for the next year and even to wage a proxy fight to replace PeopleSoft's board.

``This is very clearly thought out,'' said Ellison. ``I think we're likely to be successful and we are very determined to see this through to the end.''

PeopleSoft's board has maintained that Oracle's offer significantly undervalues the Pleasanton company whose shareholders are better off with a PeopleSoft-J.D. Edwards combination.

Ellison believes he can be patient because he sees Oracle as being one of the survivors in a software industry ripe for consolidation. With more than 100 vendors selling applications to business customers, Ellison argued that was simply too many.

Ellison said PeopleSoft was destined to wither and die, along with other smaller Oracle competitors such as Siebel Systems, because their product lines are too narrow and costly for customers to integrate.

``There are a lot of Silicon Valley companies that need to go out of business,'' Ellison said.

Ellison was preceded on the stage by Oracle Executive Vice Presidents Chuck Phillips and Safra Catz. Catz indicated that Oracle initially looked at acquiring PeopleSoft four years ago but didn't think it could pull it off successfully.

But now that Oracle is a larger company and stock prices have fallen, Catz said Oracle could launch a bid for PeopleSoft and eventually integrate it without getting distracted from its other businesses. ``We are committed to this transaction,'' she said.

Fully considered

Still, Catz said Oracle was continuing to weigh all its options. ``We don't want to drag you down every branch of the decision tree,'' Catz said. ``But rest assured, we've been down every branch ourselves.''

Later, Ellison popped onto the stage wearing his trademark brown suit and black mock turtleneck and sat on a stool from which he fielded questions from analysts. He said there were essentially three outcomes to Oracle's bid: The Justice Department blocks it following an antitrust review, and the fight is over; the Justice Department approves it and Oracle wins its lawsuit to force PeopleSoft to drop its ``poison pill'' provision; or Oracle loses the lawsuit and wages a proxy fight next year to take over PeopleSoft's board.

``Those are the only three scenarios,'' Ellison said.

Ellison reiterated that he believes the deal would be good for PeopleSoft customers and said he never claimed he would shut down its products and force customers to migrate to Oracle software. Ellison said he would not market PeopleSoft products to new customers but would continue to support PeopleSoft's software for at least another decade.

Laying blame

Ellison blamed the misunderstanding on PeopleSoft CEO Craig Conway, who had approached Oracle last year about merging the two company's applications businesses.

After getting through most of his presentation, Ellison couldn't resist one last verbal jab. ``I think at one point, `Craigey' thought I was going to shoot his dog,'' Ellison said. ``If Craigey and Bear were standing next to each other and I had one bullet, trust me, it wouldn't be for the dog.''

Last month, Conway suggested that Ellison's motive was to kill PeopleSoft's products. At the time, he told Bloomberg News that Ellison's bid was ``like me asking if I could buy your dog so I can go out back and shoot it.''

PeopleSoft spokesman Steve Swasey responded Wednesday that ``we're surprised and concerned and frankly we don't know what to make of'' Ellison's remarks. ``The tone of it and overall implication causes us concern,'' he said.

Swasey would not confirm whether Conway has a dog named Bear.

After making the comment about Conway and the dog, Ellison paused for a beat while the audience broke into laughter and then added: ``Our PR people are now having a heart attack.''

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