Gartner: No ‘White Knight’ for PeopleSoft (Yet)

In the wake of Oracle’s $6.3 billion hostile takeover attempt of enterprise applications vendor PeopleSoft , analysts with Gartner are doubtful that a “white
knight” will step in with an alternative to Oracle’s bid.

The research group said Friday that the current positions of other vendors in the infrastructure and application markets, as well as the flailing economy, dim their chances as a potential “white knight” — often defined as a friendly acquiring company sought by the target of a hostile bidder.

The findings, published in a research note titled, “‘White Knight’ Candidates for PeopleSoft,” gauge various possibilities in the Oracle/PeopleSoft standoff, but ultimately the analysts decide that a savior is not needed — for now.

“After examining the opportunities for these other vendors, we believe
PeopleSoft and J.D. Edwards prospects and users should consider a ‘white
knight’ scenario as a low probability when considering their options,” said
Betsy Burton, vice president and research director for Gartner .

“However, most vendors’ strategies will be impacted by this pivotal event in the next two years. Applications users should accordingly evaluate if and how, in light of this event, their current providers will support them.”

Gartner did not reveal what vendors it studied to make its determination, but noted that customers must use what is a relatively quiet period, as the parties and the Justice Department analyze filings and consider options, to evaluate the best course of action regardless of the merger outcome.

Other industry watchers are skeptical, too. In a recent interview with, Ken Marlin, managing partner of specialized
investment banking advisory and consulting firm Marlin & Associates,
speculated that a white knight is an outside possibility.

While there are a few companies that could do it, Marlin said he saw only IBM as the logical choice to rescue PeopleSoft from the clutches of Oracle.

“IBM is big enough and they might like the ‘white knight’ label,” Marlin said. “But there is no indication of them doing it.”

The Gartner report comes two days after Oracle CEO Larry Ellison engaged in his latest sharp-toned rhetoric about PeopleSoft and its management. Speaking during an investment conference with analysts, he also voiced confidence in his company’s ability to get the deal done.

Meanwhile, elsewhere in its study, Gartner softened its early stance on the clouded Oracle/PeopleSoft issue. Shortly after Redwood Shores, Calif.’s Oracle announced its intentions to scoop up PeopleSoft last month, Gartner issued an advisory warning clients to stop purchasing PeopleSoft products.

During a recent conference call to announce that the company would meet financial estimates, Conway expressed vindication in mentioning Gartner as a lone detractor.

Now, Gartner’s revised advice, according to Burton is: “While uncertainty lingers, Gartner has been advising clients to not simply stop all PeopleSoft and J.D. Edwards deployment activities. Assess your risk tolerance, coupled with your assessment of the likelihood that Oracle will complete the PeopleSoft acquisition.”

Gartner also said it is unlikely these acquisitions, however they shake out, will result in a change of market leadership, noting that SAP remained the dominant player in the worldwide enterprise applications software market with a 19.6 percent share. The next closest was Siebel Systems , with 7.1 percent.

A special research section on the Oracle/PeopleSoft situation is available on Gartner’s Web site here.

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