By Lisa Baertlein
SAN FRANCISCO - PeopleSoft Inc. Chief Executive Craig Conway termed Oracle's
$7.3 billion hostile bid for his company as "dead". "I think it's
over. It's a movie that's been playing a very long time and nobody's watching it
any more. I think you're trying to breathe life into something that's been dead
since mid-July," Conway said in a telephone interview of Oracle's tender
offer, now under review by U.S. and European antitrust officials.
The stock's gains this week have in fact pushed PeopleSoft stock above
Oracle's offer of $19.50 per share for the first time since the hostile bid was
launched in June.
PeopleSoft has rejected the overture from Oracle, which on Thursday
reiterated its commitment to the controversial deal that has spurred lawsuits
and a high-tech industry drama that rivals the bitter battle over
Hewlett-Packard Co.'s acquisition of Compaq Computer last year.
As the company heads into 2004 forecasting a 5 percent growth in 2004 in core
software sales and an improving economy, PeopleSoft, which recently closed its
$1.8 billion acquisition of J.D. Edwards & Co., this week raised 2003
revenue and earnings forecasts for the merged companies. The company has set the
financial targets for 2004 higher than previously forecast to reflect revised
expectations for the merged operations.
The company took control of J.D. Edwards in mid-July, around three months
earlier than anticipated, in an effort to deflect Oracle's hostile takeover bid.
At an analyst meeting on Thursday, PeopleSoft said it would have
merger-related cost savings of $167 million to $207 million, compared with its
earlier view of $150 million to $200 million. Up to $15 million in savings will
come from cutting 750 to 1,000 jobs, or about 7 percent of its total work force,
the company said.
PeopleSoft said it sees 2004 software license sales of $700 million to $715
million, which assumes organic growth of 5 percent and around $30 million in
cross-selling opportunities arising from its J.D. Edwards purchase.
"I think the economy is genuinely getting better. The question for 2004
is what the impact (of the improving economy) will be," Conway said.
If PeopleSoft delivers on its forecasts, it would likely unseat Oracle as the
world's second-biggest maker of software to manage activities like accounting
and human resources. Germany's SAP AG is No. 1, dwarfing both PeopleSoft and
Oracle in the market.
Analysts gave PeopleSoft's forecasts mixed reviews -- some called it
conservative, while others cautioned it could be overly optimistic as many large
high-tech mergers fail to live up to expectations.
"It's our best estimate. It has as much chance of being high as it does
of being low," Conway said.
Oracle said on Thursday it has extended its tender offer for PeopleSoft to
Oct. 17 from Sept. 19. Oracle said 38.7 million shares had been tendered as of
the close of business on Sept. 4. As of the end of the second quarter,
PeopleSoft had about 318.6 million diluted shares outstanding before announcing
a $350 million stock buyback on Sept. 4.