September 21, 2004 10:54 AM PDT
PeopleSoft CEO vows to keep up the fight
"Have you ever had a bad dream that just didn't end?" an upbeat Conway asked a crowd of PeopleSoft users. "We have--ours has been going on for 15 months."
Projecting confidence and cracking jokes, Conway gave the keynote speech at the company's annual convention, where more than 14,000 PeopleSoft customers, partners and employees have convened for the week.
Although the antitrust ruling keeps Oracle's takeover hopes alive, Conway--who said his lawyers wouldn't let him say much--promised that his company is far from defenseless.
The chief executive is under mounting pressure after a federal judge sided with Oracle earlier this month, ruling that the software maker's proposed $7.7 billion acquisition of PeopleSoft poses no threat to competition in the market for business administration software, as the U.S. Department of Justice had charged.
Although Oracle must still clear some hurdles before it can consummate the hostile deal, PeopleSoft was counting on a ruling against Oracle. The company's board, on which Conway sits, has resisted numerous Oracle bids since the unwelcome suitor began offering them 16 months ago. The board said antitrust concerns were a primary reason it opposed the merger.
Conway listed some of the remaining cards in PeopleSoft's hand. First, the Justice Department may appeal its courtroom loss. Second, European regulators still have to consider the proposed acquisition. And third, PeopleSoft has in place a "poison pill" defense that would meet a takeover attempt with an expensive flood of new shares. Finally, PeopleSoft's lawsuit, charging that Oracle's attempt is a charade to cripple its rival, is still pending. That trial is expected to begin in January.
PeopleSoft customers, who number beyond 12,000, worry that an Oracle takeover will cause them big headaches. Many have spent millions of dollars to license and install their PeopleSoft systems, which help companies with staffing, accounting and customer service tasks. Oracle vows that it will support and maintain the programs for at least 10 years but doesn't plan to develop significant new features or sign up new customers for them.
Although many here are anxious to hear how PeopleSoft intends to handle the Oracle threat, few expect Conway to have many definitive answers this week. The company had signaled that it won't capitulate while the Justice Department is still weighing an appeal of the antitrust ruling.
Still, if Conway demonstrates grace under pressure during the conference, he could help ease tense times for customers and employees, and prove he's a capable leader.
Also in the speech, Conway announced a new partnership with IBM in which the companies will jointly invest $1 billion over the next five years. The partnership is meant to package IBM's middleware programs with PeopleSoft's business management programs. PeopleSoft plans to give away IBM's WebSphere with its software, Conway said. The middleware is supposed to help customers connect programs from PeopleSoft with those of other vendors more easily.
Charles Di Bona, an analyst with Bernstein & Co., said at the later press conference about the deal that he didn't think the IBM pact would influence the views of shareholders about the takeover offer. "They should just take $21," he said.
Conway was upbeat about the deal, which he called "far-reaching and strategic," and PeopleSoft's prospects.
"Overall, it has not been a bad year," Conway said. "Except in one way."