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Oracle woos PeopleSoft users

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CIOL Bureau
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SAN FRANCISCO: According to Oracle President Charles Phillips, their proposed $9.4 billion takeover of PeopleSoft Inc. would help PeopleSoft customers and not harm competition given the large number of smaller companies in the business applications software market.



"The bottom line is the market for enterprise applications is highly, highly competitive," he said at the Quest West Conference, the user conference held in San Diego for customers of software from J.D. Edwards, which was acquired by PeopleSoft last year.



"I'm not here to bash PeopleSoft," said Phillips, one of two co-presidents at the world's second-largest software company. "Oracle is of course engaged in an intense takeover battle with PeopleSoft, but that's business."



The PeopleSoft board, which has rejected three offers from Oracle, including the most recent offer of $26 a share, has vigorously opposed Oracle's aggressive takeover attempts.



The U.S. Department of Justice last week filed a civil antitrust lawsuit seeking to block the proposed takeover on the grounds that it would harm competition by eliminating one of three main players in the market for software sold to large business customers to manage finances, human resources, sales forces and other business functions.



"Each side believes in its cause and we'll see what the court decides. While some may not like the confrontation, that's our Darwinian system and certainly their shareholders have already benefited from our offer," Phillips said, referring to the 40 percent rise in PeopleSoft shares since Oracle first made its takeover offer in June.



Oracle has said it will fight the government in the belief that the market is larger than the government contends.



Germany's SAP AG has about three times the market share of either No. 2 supplier PeopleSoft or third-ranked Oracle, said Phillips, who was with Morgan Stanley's Institutional Securities Division before being recruited by Oracle last year.



The government's argument ignores the fact that there are many other companies that sell into the market, including Lawson Software Inc., SSA Global Technologies Inc. and Geac, and that Microsoft Corp. is also investing to get into the market, Phillips said.



Microsoft has spent billions to get into the market for small to mid-sized companies, he noted. "To compete, we'll need similar economies of scale and that's the thinking behind this acquisition."



"It's the very large category of 'other' on the market share chart that represents intense competition and innovation," Phillips said.



"Plus, it's a buyer's market," he added. Customers, consultants and system integrators "can assure they receive aggressive pricing, regardless of the size of the organization."



A spokesman from PeopleSoft did not return a call seeking comment. A Justice Department spokeswoman said the agency had no further comment beyond its statements last week when filing the lawsuit. "We are preparing our case for trial," she said.



Phillips said he could not tell the users of J.D. Edwards software what Oracle would plan for the products, but that Oracle anticipates offering every PeopleSoft customer the same customer support services it offers to Oracle customers.



"Lots of things could change in the J.D.Edwards product line by the time we close the deal," he said.



Oracle successfully integrated Rdb, the database it acquired from Digital Equipment 10 years ago, and still has thousands of happy Rdb customers, according to Phillips.



"We think our track record speaks for itself," he added.



Barbara Schmit, president of Quest Direct, the not-for-profit user group for J.D.Edwards customers, said she had invited both Oracle and PeopleSoft to address the conference, but that PeopleSoft declined.



"Quest is on record opposing the merger between PeopleSoft and Oracle and we are not reversing our stand," she said.



PeopleSoft shares closed off 1.4 percent at $21.28 and Oracle closed up 1.6 percent at $13.08, both on the Nasdaq.



© Reuters

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