PeopleSoft: Oracle E-mails Point to Hostile Intent

Two weeks after expanding its lawsuit against Oracle ,
PeopleSoft Wednesday yielded evidence to support its
complaints by unveiling internal e-mails from Oracle employees that suggest
they were aware of just how the company’s actions were hurting PeopleSoft.


The revelation is the latest in a pernicious takeover battle between two enterprise
application rivals. Redwood Shores, Calif.’s, Oracle is trying to purchase
PeopleSoft against its will for $7.3 billion. In turn, Pleasanton, Calif.’s
PeopleSoft has been doing everything in its power to stymie Oracle’s hostile
overtures.


PeopleSoft’s lawsuit amendment, filed in a California court August 12, had
originally been sealed, but PeopleSoft chose to unseal the amended
complaint, highlighting what would appear to be damning e-mails from Oracle
in which employees discussed how the hostile takeover attempt could damage
PeopleSoft’s business.


PeopleSoft alleged Oracle knew exactly how its takeover attempt was
affecting the target company. Some of the e-mails portray the Oracle
authors in gloating tones.


“We’ve certainly wounded PSFT,” one employee said, according to the
PeopleSoft complaint. “Even if we don’t end up closing the deal, this is
going to take PSFT time to recover. And, of course, our corporate image of
being aggressive, brash, and marching to the tune of a different drummer has
been reinforced. I dunno about you guys, but today I was very proud to be an
Oracle employee!”


PeopleSoft also made a bid to prove Oracle tried to sway analysts to
dissuade customers from buying PeopleSoft software.


“Obvious customer advice such as wait on purchases until this is over should
be highlighted,” PeopleSoft quoted Peggy O’Neill, vice president of analyst
relations, as writing to one analyst.


There are also e-mails from Oracle executive vice president Safra Catz
suggesting it would not continue support for PeopleSoft products, something
Oracle has steadfastly said it would do to assuage any customer fears that
they might be locked out of their license agreements.


Oracle was prepared for the maneuver and downplayed PeopleSoft’s claim as a
“diversionary tactic.” Oracle spokesperson Jim Finn said in a statement that
PeopleSoft was simply taking the e-mails out of context. In fact, he said,
Oracle would have preferred the court documents be made public from the
outset to show that the company has nothing to hide and that it meant no ill
will.


Finn said Catz’ comments in the PeopleSoft filing are especially twisted out
of their original context.


“The e-mail…” Finn said, “…is a good example of PeopleSoft’s attempt to
take a single sentence fragment from a lengthy document out of context and
try to turn it into something salacious.” Rather, he said, Catz’ e-mail
focuses on the opportunity for Oracle and the positive impact of the
proposed transaction to Oracle’s earnings per share. “It does not talk about
harm to PeopleSoft.”


What the experts say


Why the “he-said, she-said”-style jousting over e-mails? Pure strategy on
PeopleSoft’s part, says one attorney.


PeopleSoft’s intent in unsealing such documents is to demonstrate motives
proving antitrust on the part of Oracle — something Coudert Brothers
attorney Robert Christopher anticipated in June.


“If I’m the DOJ or FTC, I’m going to ask Oracle for internal documents,”
Christopher told internetnews.com in a June 27 interview. “I want to
know how they perceive the market and how just how broad it is. I might ask
‘What is truly the relevant product market? Does Oracle see this as a move
to consolidate a market?’ And I would expect Oracle is prepared to deal with
that.”


The thinking, Christopher said then, is that if PeopleSoft can demonstrate
hostile intent, the Department of Justice would be forced to take
PeopleSoft’s claims of unfair trade practices seriously.


Christopher reiterated his thoughts Wednesday, and said the quotes
PeopleSoft provided to the public as evidence could be damning to Oracle’s
case as well before the DOJ.


“Sure, these e-mails should be taken in context of what was written, but
what about the overall context in what is going on?” Christopher said. “I
read the quote “Time is on our side’… That particular point is consistent
with what PeopleSoft is claiming Oracle is trying to do — that they are
happy to hurt PeopleSoft even though they want to acquire it. Everybody
knows that what businesses hate most is uncertainty and that is what Oracle
is doing to PeopleSoft because uncertainty hurts the core of their
business.”


As for the almost jubilant quote from an Oracle employee claiming it hurt
PeopleSoft, Christopher said its shows Oracle knows they are dangerous.


“In a way, what that’s saying is that ‘we know that we’re wolves'”
Christopher said. “But wolves kill. There’s truth there, and it may work for
PeopleSoft in their legal claims of anticompetition. What I haven’t seen is
e-mails in which Oracle is expressing great concern about their ability
to survive and compete effectively with SAP if they do not acquire PeopleSoft.
That could help them in the eyes of the DOJ because it is perfectly
legitimate.”


But Ken Marlin, managing partner of Marlin & Associates, a mergers and
acquisitions investment bank focused on media and tech, called PeopleSoft’s
attention to Oracle’s internal e-mails a desperation move.


“It’s the red herring, it’s the magician’s trick,” Marlin told
internetnews.com. “They’re diverting attention from the real issues.
Not only are they taking it out of context, if you read what PeopleSoft is
whining about, it’s just not that big a deal.”


For example, Marlin cited a quote from Oracle executive vice president Chuck
Phillips, who said a customers concern that migrating from one software
platform to another is never easy or cost-free was absolutely true.
PeopleSoft had pointed it out as evidence that the migration would be
disruptive.


“It’s true,” Marlin said. “Take the simplest thing you can think of — like
creating a document in [Microsoft] Word and sending it to a computer that
will read it in WordPerfect, or vice versa. There is a utility to do that
and it never comes out perfect and that is a very, very simple application.”


Moreover, Marlin argued that Oracle should migrate PeopleSoft software to
one integrate product suite and struck down the notion that Oracle is
hurting customers.


“One point that PeopleSoft’s management is ignoring, is that it’s not in
Oracle’s interest to make enemies of PeopleSoft customers. It’s completely
in Oracle’s self-interest to keep them happy and to give them an easy
migration path. To imply that Oracle’s ‘secret, nefarious’ plan is to spend
billions of dollars to get PeopleSoft customers to go to SAP is crazy.”


Meanwhile, the DOJ continues to probe Oracle’s takeover bid for antitrust
issues. Oracle’s own lawsuit against PeopleSoft, asking that the court force
PeopleSoft to drop its takeover defenses and negotiate, is still pending in
Delaware. A hearing is scheduled in mid-September.

News Around the Web