PeopleSoft: What the customers and staff are saying
Published: 15 Dec 2004 14:35 GMT
"I think it's both the worst and best thing to happen to SAP," Greenbaum says. "It's the worst in that they now have a big global competitor with a lot of resources."
"The good news is that competition sharpens one's senses and appetite," he continued. "I think SAP responds well to competitive threats. It will keep them on their toes, and that's good for the industry."
IBM has more to lose from the deal, analysts say. For one thing, PeopleSoft generates a lot of business for IBM's computer services unit, which has specialised in installing and customising PeopleSoft's complex programs.
IBM also sells database software and other tools that complement PeopleSoft's programs and compete with Oracle. In September, PeopleSoft and IBM announced a five-year plan to more tightly link their products. That deal may also be in jeopardy since Oracle is partial to its own products.
"There is no getting around the fact that IBM isn't going to be very happy" about the merger, says AMR Research analyst Jim Shepherd. "They can rebuild their Oracle services practice, but it won't make up for the PeopleSoft practice, which is certainly going to diminish."
An IBM representative downplayed the news, saying that the company expects to continue its work with PeopleSoft customers and has many other important alliances.
"We have tens of thousands of partnerships, many of them with the most well-known software applications firms, including SAP and Siebel Systems," IBM spokeswoman Lori Bosio said.
Yet during the its antitrust trial, Oracle submitted evidence showing that IBM feared its purchase of PeopleSoft. In a document that IBM created about a week after Oracle launched its hostile bid, Big Blue lamented the prospect of the software market consolidating into the hands of database rivals Oracle and Microsoft. The documents also showed that IBM considered acquiring "blocking stakes" in key software companies and launching lobbying efforts against certain mergers with regulators.
Microsoft also viewed the PeopleSoft-Oracle merger as a threat and approached SAP about a merger last year in response to the bid -- another juicy titbit made public in the June trial.
Microsoft, which doesn't rely on PeopleSoft as much as IBM does for its database business, has less reason to worry about the Oracle deal, analysts say. However, Microsoft may need to reassess its own fledgling effort to establish a corporate applications business in light of the deal.
"I think the odds are 50-50 that they are in this business in five years," Greenbaum says of Microsoft. "If they stay, odds are that they make another acquisition."
A Microsoft representative declined to comment.
Layoffs loom
While customers and competitors ponder the deal, PeopleSoft's 12,000 employees -- many of them based in the company's Pleasanton, California, headquarters -- have more reason to worry. As many as half of them could lose their jobs. Oracle president Safra Catz testified during the June antitrust trial that her company planned to fire about 6,000 workers, with PeopleSoft taking the brunt of the layoffs. In an interview Monday with CNBC, Ellison says the layoffs will hit both sides.
Several employees interviewed at the firm's Pleasanton campus on Monday, each of whom requested anonymity, expressed concerns about the deal.
"I thought it would take another six to eight months," says one PeopleSoft employee, who previously worked at Oracle and does not expect to be hired back. "I thought Oracle wouldn't raise its bid until a couple days before PeopleSoft's [March] shareholders meeting."
PeopleSoft invited employees on Monday morning to call in to a companywide teleconference, where PeopleSoft chief executive David Duffield explained the rationale for the merger and what to expect next.
After the call, employees were seen throughout the day gathering in pairs or small groups to talk about the fallout of the merger, one contract worker says.
"It's been like grade school, where people are busy chatting in the hallways," he says. "As I walk around, it seems like only half the people are working. The rest are talking to co-workers or friends and family on the phone."
Another employee, an engineer who has worked at PeopleSoft for six years, says he's not too concerned about losing his job because Oracle doesn't compete with the product his group develops.
"I'm not worried," he says. "I expect to be picked up."
News.com's Dawn Kawamoto contributed to this report.
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