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Oracle: No PeopleSoft Spin-Off

SAN FRANCISCO -- If Oracle can pull off its $9.2 billion hostile takeover plans, PeopleSoft's software divisions should remain generally untouched.

That's the message delivered this week at Oracle's OpenWorld conference here. In a briefing of press and analysts, company President Safra Catz said Oracle is looking to keep as many PeopleSoft and former J.D. Edwards engineers on board as possible if and when the merger happens.

Oracle is offering $24 per-share for its Pleasanton, Calif.-based rival. PeopleSoft's board of directors continues to hold out for more money even though 61 percent of shareholders sided with Oracle in last month's straw poll.

Catz said outside of the price, which her bosses are negotiating, Oracle continues to quell fears that a sale would result in slashing PeopleSoft's products.

"We have no intention of spinning off PeopleSoft Enterprise One or any of the products," Catz said. "We will bring them in, evaluate the state of the code and bring it, ultimately, into a converged product line."

A day earlier, Charles Philips, also an Oracle president, echoed Catz's statements, adding "there would be two separate tracks for the products," and not one "super set product," which combines the best of both companies.

Oracle said its plan is to support -- but not develop -- PeopleSoft products for the next 10 years.

Previously, Oracle considered layoffs of as much as 6,000 PeopleSoft staff to reduce the amount of redundant positions. Now the company seems driven to keep the teams relatively whole as a strategic advantage.

"We want to maintain as many folks as we can," Catz said. "Our big worry is the intellectual property and development organization at JDEC [J.D. Edwards], and our hope is it is still in a position where we can maintain it."

Catz also said she was troubled by news that PeopleSoft was dismissing some J.D. Edwards teams. Not so, according to PeopleSoft spokesman Steve Swasey who rebuffed Catz's claims. He said staff reductions are not currently in effect and that the last batch of PeopleSoft employees to depart were those in duplicate jobs after the J.D. Edwards merger was finalized.

"PeopleSoft is maintaining a very strong employee base," Swasey told internetnews.com. "We made some adjustments after the merger in September 2003 for non-revenue-generating and overlapping positions mostly in the marketing, human resources, IT technologies and support functions. But overall we are one company.

Company executives are scheduled to meet with Delaware Chancery court judge next week to decide the lawfulness of PeopleSoft's "poison pill" and customer assurance rebate program. Both anti-takeover measures are designed to thwart Oracle's hostile bid.

While Oracle remains optimistic that it can win over shareholders, executives remain realists when it comes to predicting.

"Poison pills are very rarely pulled," Catz said. "However, we believe if there was ever a case to pull a pill, this is it. We expect ultimately to be successful. We hope sooner than later."

If the judge enforces the poison pill, Oracle said it needs to persuade PeopleSoft shareholders to let it usurp its board of directors with a slate of its own in a proxy vote in March 2005.