PeopleSoft upsets merged customers
Published: 29 Jul 2004 11:05 BST
Lured by the promise of personal attention every bit as good as that lavished on bigger customers, John Matelski decided seven years ago to buy a $1.7m (£0.94m) accounting system from J.D. Edwards for the City of Orlando, Florida.
"I didn't want to be a minnow in an ocean," said Matelski, the city's chief information officer, who turned down a rival bid from PeopleSoft to supply the software.
But these days Matelski is feeling very much like that little fish. Nearly one year after PeopleSoft's $1.8bn acquisition of J.D. Edwards, Matelski says apathy has replaced tender loving care when he calls up PeopleSoft headquarters for customer support.
Other J.D. Edwards customers have complaints, too. Some lament the lack of attention. Others are annoyed at being asked to pay higher fees as PeopleSoft renegotiates their maintenance, training and licence contracts. Though few are straying from the PeopleSoft fold, neither are they clamouring for more software the way the company predicted they would.
Some of these problems may be routine for a billion-dollar merger. But PeopleSoft has billed the merger has a "better plan" for shareholders than a buyout bid from rival Oracle, and it can hardly afford to alienate customers as it fights to remain an independent company. Oracle is pursuing a $7.7bn hostile takeover of the company -- an effort it launched last year, before the ink had dried on J.D. Edwards deal. All three companies make business-efficiency programs that help companies process orders, update staff records, keep their finances in order and handle myriads of other office tasks.
A San Francisco judge is now deliberating on whether the Oracle bid poses an antitrust threat, as federal trustbusters charge. If Oracle wins, its $21-per-share, all-cash tender offer may start looking pretty good to PeopleSoft shareholders. Shares of PeopleSoft closed at $17.32 on Monday and have been in a steady slide all year.
PeopleSoft's announcement on Tuesday that its revenue missed lowered targets cast doubt on the company's business plan. The software maker blamed its financial miss on the Oracle mess, but securities analysts suspect its problems run deeper.
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