Defence digs in for Oracle siege

With no clear direction emerging in Oracle's hostile takeover bid for PeopleSoft, customers continue to be paralyzed by market confusion.

Having endured a series of dramatic events over the past month culminating in the termination of PeopleSoft CEO Craig Conway, PeopleSoft's biggest Australian clients are quietly evaluating the prospect of life under Larry Ellison - and what impact a PeopleSoft sell-out to Oracle may have on current contracts.

Department of Defence director general of personnel systems, Peter Lush told Computerworld he was following developments between Oracle and PeopleSoft very closely, but he did not anticipate serious disruptions should Oracle succeed in acquiring PeopleSoft.

"Our position remains the same. We see no likelihood of the [PeopleSoft] application collapsing overnight," Lush said, stressing he in no way wanted to predict the outcome of Oracle's takeover attempt.

Asked if Defence feared Oracle may attempt to kill off PeopleSoft's applications in favour of their own, Lush said such a move seemed unlikely.

"It's inconceivable that Oracle would want a hostile user base that would be created by [cutting support out from under the application]. If it becomes rebadged Oracle, we'll take [any decision to continue on the application] at that time based on functionality and business considerations," Lush said.

Meta Group senior analyst Brian Prentice also confirmed that PeopleSoft users had been in touch trying to clarify which way takeover repercussions from Oracle may flow.

"The general mood among PeopleSoft customers is that they are happy being PeopleSoft customers. They are putting a lot of money into these [deployments] and they are not clear on what's happening. It's not like [users] can just jump and do something different," Prentice said.

In terms of making predictions on the outcome of Oracle's takeover moves, Prentice said little information was available on how PeopleSoft proposed to deal with a series of hostile acquisition countermeasures it had recently instituted, and whether such countermeasures would remain binding.

"It has totally clammed up on this, it is saying nothing.

"Shaking the magic 8-ball, it says: outlook hazy, try again," Prentice said.

PeopleSoft director of corporate public relations Steve Swasey warned it was important not to confuse PeopleSoft's customer assurance program (which allows for new customers to claim back up to five times the licensing cost they outlaid) with the so-called poison pill - a shareholder rights mechanism that saw more stock issued to existing shareholders in the event of a hostile takeover attempt.

"We communicate with our customers all the time. We have exceeded all expectations in licensing revenue. We are continuing to attract customers," Swasey said.

He added PeopleSoft had beaten its own revenue estimates for the quarter ending September 30 2004, going from $US129 million to US$155 million.

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