PeopleSoft Rejects Oracle Bid

PeopleSoft rejected Oracle’s latest takeover offer on Friday, but you can bet that you haven’t read the last word on that story.

The rejection increases the likelihood that PeopleSoft will complete its merger with JD Edwards . Which means that if Oracle is still intent on acquiring PeopleSoft, it may have to spend even more to acquire both companies.

And PeopleSoft, trading more than $2 a share below Oracle’s offer of 19.50 a share, could face a lawsuit if it can’t increase shareholder value.

PeopleSoft’s results could be threatened in the near term by the uncertainty the Oracle offer created, and by Oracle’s threat to stop selling PeopleSoft products. That could pressure PeopleSoft’s share price, which was just above $15 a share when Oracle first attempted its hostile takeover bid.

In turning down Oracle’s offer, PeopleSoft said the offer undervalues the company, faces significant regulatory hurdles, and threatens PeopleSoft’s business.

PeopleSoft may be right that the Oracle offer undervalues its business. But now the pressure is on to prove it.

The broader market was mixed Friday, as blue chips gained on strength in GM and GE.

The Nasdaq slipped 3 to 1641, the S&P 500 gained 1 to 995, and the Dow rose 21 to 9200. Volume rose to 1.7 billion shares on the NYSE, but declined to 1.75 billion on the Nasdaq. Decliners led 16-15 on the NYSE, and 16-15 on the Nasdaq. Downside volume was 53% on the NYSE, and 60% on the Nasdaq. New highs-new lows were 98-3 on the NYSE, and 122-8 on the Nasdaq.

J2 Global soared 16% for a second straight day of big gains after raising prices.

Cisco fell 3.4% after taking over troubled Cogent.

Solectron , Tibco and Cognos plunged on disappointing results.

Symbol lost 1.8% as a fraud probe widened.

Roxio fell 11% on cash burn concerns related to Napster funding.

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