September 20, 2004 4:00 AM PDT

PeopleSoft's last hurrah?

Thousands of customers attending what could be PeopleSoft's last independent annual conference want to know: Will Oracle prevail?

For answers, they'll turn to Craig Conway on Tuesday morning at PeopleSoft's weeklong customer bash in San Francisco. The chief executive will be making his first public appearance since Oracle's victory earlier this month in the antitrust case over its unwelcome $7.7 billion attempt to buy PeopleSoft.

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What's new:
PeopleSoft's annual user conference kicks off on Monday, just a few weeks after rival Oracle prevailed in the latest legal challenge to its hostile takeover attempt.

Bottom line:
More than 14,000 PeopleSoft customers, with their software investments at stake, will turn to CEO Craig Conway for reassurance in what could be the company's last independent user conference.

Conway's unenviable task will be to reassure thousands of anxious customers, following a federal judge's dismissal of their concerns over Oracle's proposed buyout of PeopleSoft. In his decision, the judge rejected U.S. Justice Department arguments that an Oracle-PeopleSoft merger would be anticompetitive, opening the door for Oracle to pursue its target.

The recent turn of events is certain to cast a pall over PeopleSoft Connect, a typically festive event. The annual conference starts Monday at San Francisco's Moscone Center.

Though most PeopleSoft customers have rallied around Conway since the Oracle siege began, some are starting to grow restless.

"I'd like to see what Craig is going to say to abate the concerns of 10,000 people that are traveling down a path that could disappear in three or four years," said Mark Anderson, manager of human resource and payroll systems at PeopleSoft customer TravelCenters of America. "I'm looking for more than, 'don't worry.'"

At last year's conference in Anaheim, Calif., Conway tried to find some humor in the Oracle situation. Donning bulletproof vests, he and his dog Abbey appeared on stage, playing off a controversial comment from Oracle Chief Executive Larry Ellison. With his characteristic swagger, Ellison had told a room full of Wall Street analysts weeks prior that if he had a gun with only one bullet, he'd choose Conway over Conway's black lab as a target.

"I'm looking for more than, 'don't worry.'"
--Mark Anderson of PeopleSoft customer TravelCenters of America.

Such antics are unlikely this time, when Conway addresses attendees on Tuesday morning. "I think things are much more serious now," Yankee Group analyst Mike Dominy said. "I don't think Conway will have any ammo or opportunity to do that."

The 14,000 PeopleSoft customers expected to attend this year's conference will likely be in for a somber affair, according to another analyst.

"This is starting to look like the world's largest wake," said AMR Research analyst Jim Shepherd.

The elephant in the room
The ruling was the latest twist in PeopleSoft's 16-month struggle to escape its rival's clutches and one that puts the company in a tight corner. PeopleSoft sent letters to its employees last week indicating it intended to keep up the fight, but observers say the outcome is largely in the hands of shareholders.

PeopleSoft is the second-largest supplier of enterprise resource management software, behind SAP and just ahead of Oracle. The company was founded in 1987 and rose to prominence as one of the first suppliers of human resources software on then-emerging client/server computing networks. PeopleSoft eventually expanded into financial management, supply chain, manufacturing and customer relationship management software, and had reached $1 billion in revenue by 1998.


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Some of the world's biggest corporations use PeopleSoft's applications software to perform human resources, accounting and customer service tasks. They include Ford Motor, United Airlines, AT&T Wireless, Wells Fargo, Home Depot and Dell.

Many have spent tens of millions of dollars to license and install the software and are loath to replace it. They fear they'll have to do just that if Oracle buys PeopleSoft and phases out its products. Oracle promises to support the products for at least 10 years, but doesn't plan to actively sell them or develop significant new features.

People are eager to witness the latest chapter in what has been a nasty war of words between Ellison and Conway. Press and analyst attendance is expected to be double what it was at previous conferences, a PeopleSoft representative said.

Yet what happens on stage is often less critical than what goes on behind closed doors at these events. Normally, conferences provide the perfect opportunity for a business software company to woo customers and sign deals. In addition, the conference falls just before the end of the PeopleSoft's financial quarter on Sept. 30--a critical period for signing up customers to help meet earnings targets.

PeopleSoft's uncertain future has weighed heavily on the company's earnings. For its fiscal second quarter, which ended June 30, PeopleSoft met lowered earnings targets, but missed revised revenue projections. The ongoing battle with Oracle was a major distraction for customers, Conway said at the time.

Some analysts said that PeopleSoft's financial woes can also be tied to indigestion after the company swallowed rival J.D. Edwards last year. And the company is grappling with a wobbly recovery in the corporate software market that is affecting many suppliers.

But clearly, after Oracle's recent court victory, the situation has become more desperate. "How they're going to be able to close deals is hard to imagine with an elephant like Oracle in the room," said Joshua Greenbaum, an analyst at Enterprise Applications Consulting.

Warn the bouncers
Headquartered just down the highway from San Francisco in Redwood Shores, Oracle might be tempted to crash the party or invite PeopleSoft customers to take a detour to its offices. The company has tried to court PeopleSoft's customers before through a series of teleconferences led by Oracle co-President Charles Phillips. But one analyst cautioned against any such brazen moves.

"Oracle would be foolish to do anything to disrupt the conference. They need to project an image of being stewards of safety and customer friendliness," said Merrill Lynch analyst Jason Maynard. "And that doesn't mean running down the street and hugging them."

An Oracle spokeswoman declined to comment on whether the company is planning any related events for the conference.

Perhaps a confident Oracle is content to let PeopleSoft have one last hurrah. "This may be the last independent PeopleSoft user conference," Greenbaum said.

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Score one for big capitalists
"Oracle promises to support the products for at least 10 years, but doesn't plan to actively sell them or develop significant new features"

Isn't this exactly what industry observers - and indeed PoepleSoft and the DOJ - initially feared. It's the age old tactic of purchase and plunder. So ironic that Ellison, despite his years-old contempt for Gates shares so much in common with him.
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Article's doom and gloom vastly overstated
This author's perspective was shocking probably because I have been here at PeopleSoft Connect 2004 for two days now, and I have not seen the "pall" that the author predicts. In fact, this is perhaps the most successful and vibrant conference I have been to. Indeed Craig Conway did address the long drawn out saga of the Oracle tender offer in his comments this morning, in which he indicated that the district court decision had no effect at all. The Justice Department still has the option to appeal this decision, the European Union still has a review underway and they have already voiced their objections in a early letter, and PeopleSoft continues to have their suit filed in California against Oracle seeking monetary damages, as well as the shareholder rights initative. It was clear from Mr. Conway's comments that the saga is far from over, and that the Company is as vibrant and it's customers are enthusiastic as ever about the company and it's products and it's current direction. The audience was just as enthusiastic about their disaproval of Oracle when the company's name was mentioned in the course of Mr Conway's speech.
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