October 1, 2004 8:50 AM PDT
Does new Peoplesoft CEO signal a buyout?
Many analysts on Friday said the ouster of Craig Conway and the return of Dave Duffield is likely a prelude to PeopleSoft accepting Oracle's offer.
"I think this removes a hurdle in getting the deal done," said Art Hogan, an equities analyst with Jeffries & Co. "That certainly seems to be the opinion of Wall Street, and the Street is usually right in situations like this."
PeopleSoft fires Conway
Board cites "lack of
Torrey pointed out that the transaction committee on PeopleSoft's board, which consists of independent directors--not Conway alone--was responsible for turning down Oracle's offer over the past 15 months.
The unexpected news is the latest turn in a nearly 16-month-old battle between the business software makers. News of Conway's ouster drove up PeopleSoft shares by nearly 14 percent in afternoon trading, to $22.60, surpassing Oracle's takeover offer of $21 a share.
Conway, who served as one of Oracle CEO Larry Ellison's top lieutenants before departing for PeopleSoft, had been staunchly opposed to an Oracle takeover. Just a few weeks ago, at PeopleSoft's annual user conference, he vowed to continue the fight.
Justice Dept. no appeal
Antitrust regulators decide
to call it a day
No matter which way PeopleSoft's board decides, Conway's removal gives the company more latitude. "I don't think the board has made up its mind yet on the Oracle bid," said Brendan Barnicle, an analyst with Pacific Crest Securities. "Removing Conway gave them a way to position themselves properly in case they want to go through with it or in case they want to continue to defend themselves against it."
Duffield gave no indication that the fight with Oracle is over. "I'm here for the long term," he said in a conference call Friday morning.
Both Oracle and PeopleSoft have struggled in recent quarters as sales of their business application software slows. The weakening market conditions might drive PeopleSoft to reconsider Oracle's bid.
Other analysts doubt that PeopleSoft would bring back Duffield only to cave in to Oracle. "I don't know that they're so much giving in, but they're going to work to get a great price, probably higher than what's been offered so far," said Bruce Richardson, an analyst at AMR Research in Boston. "I talked to insiders this morning who said the next thing is to watch for old insiders to come back. That would be the one thing that would argue (in favor of a continued fight). You wouldn't bother doing that if it was just about giving in."
Conway leaves a mixed legacy, Richardson said. "First, he'll (Conway) be vilified and remembered for his steadfast opposition (to the Oracle deal). But he was the one who bet the farm in 100 percent on Net infrastructure."
CNET News.com's Marguerite Reardon, Margaret Kane and Dawn Kawamoto contributed to this report.
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