Federal Judge Rules Oracle can Bid for PeopleSoft

terrymaster69 writes "The NY Times reports (free reg, required) that Oracle may have the go ahead to continue its hostile bidding for PeopleSoft. The Justice Department had previously tried to paint the merger as anti-competitive in the corporate services software market. 'Judge Vaughn R. Walker of the Federal District Court in San Francisco rejected the government's definition of the market as too narrow, noting that the software business is particularly dynamic, with a host of current and emerging competitors in that area including Microsoft.'"

Comments

Re:not out of the woods

[LostCluster]

"3 major players"... but there are a ton of industry-specific ERP-ish systems out there for every industry you can think of ranging from office supply sellers to construction project managers. Also, there's plenty of business out there who skip over the full marketplace and hire a programmer to make their own resource tracking program using tools as simple as Microsoft Access which works great for a truely small business even though its scalablity is limited.

I agree with the judge here... the ERP software field is filled with players small and large. There's no monopoly risk in letting Oracle and PeopleSoft merge... just like there's far more places that sell hambugers than McDonald's and Burger King. Just because their two of the biggest, doesn't make a merger that creates a monopoly possible.

Re:Point

[skaffen42]

Microsoft have considered buying SAP have they? Don't make us all laugh now. SAP is as big, if not bigger, than Microsoft.

Dude, what have you been smoking? SAP has a market cap of about $46 billion and anual revenue of about $9 billion a year. Microsoft has a market cap of nearly $300 billion and revenues of around $37 billion a year. So I'm not really sure how you can claim SAP is as big as MS.

For comparison, Oracle has a market cap of $51 billion vs. Peoplesoft's market cap of $7 billion. Looking at it that way, the ratio in sizes between MS/SAP compared to Oracle/Peoplesoft is about the same.

Draw your own conclusions...

Karma-whoring

[genixia]

Registration free story is available from the BBC.

Re:it's not architectures

[BitterAndDrunk]

It's a combination of a few factors: (this is from my work implementing SAP and Oracle)

1. They're not designed with an end user in mind - they're designed to make the accounting package interact with every other bolt-on module. What occurs is a programmer with no idea how to, say, plan a line is put in charge of developing all the forms and interfaces for that type of job.
2. Kruft/feature creep - Customer A wants a feature to shine the shoes of his CEO and accompanying sycophants. Oracle says "ok" and implements it on top of preexisting flows. The documentation may or may not be updated.
3. Generalization of businesses - the underlying assumption of ANY ERP is most of the business processes that will be tracked/automated/integrated are generic and standard to a business and will only require modest tweaking. This is the most blatant of lies the ERP vendors make (niche players excluded). Overgeneralization forces almost a reinvention of the wheel - either changing processes or changing the program. Guess which one happens most ;)

4. Finally, an ERP is just such a damn big undertaking. AR/AP, human resources, CRM (which Oracle's product is laughable. Too bad I make a living off of it), inventory, purchasing, manufacturing, planning, sales - all need to be integrated.

   While there are "standards" of how to implement all of these products, the teams tend to be distinct and insulated from one another, sometimes taking completely different approaches to how they implement the solutions, making a customization effort quite difficult.

   One of the biggest gooches is also the nasty little relationship of ERP vendors and their own consulting firms. They're trying to make money by implementing these products, so the documentation tends to be shoddy and it tends to be very difficult to get real answers on how to do something or how a specific thing works. Hell, Oracle's J2EE architecture is bogus, with most industry standard functions having changed names, making a standard J2EE developer near useless. Well, until you decompile the whole stinking stack to trace back what you need.

   And as an aside to the main topic, Oracle has a long history of acquiring firms and integrating their designs. This is nothing new, but it won't be an improvement on the peoplesoft product.

Re:Point

[TopShelf]

Baan was bought by SSA Global, which produces BPCS. SSA has been on a bit of a buying binge, having bought WMS (Warehouse Management System) vendor EXE as well.

From the Trenches

[Prien715]

I work for state HR (everyone here does the tech side of things). We use PeopleSoft and Oracle. Everyone here is also adamantly against the merger.

First, Oracle's ERP software sucks a lot. We worry PS will die (be swallowed) and be forced to use inferior tools.

Second, we have our choice of DBs right now. We may choose Oracle, but we could choose DB2 as well. If the conditions were to change (software price/quality/etc) we could change. We like having that freedom. I doubt PS post-Oracle would release a DB agnostic product.

Re:Let me get this straight

[lucabrasi999]

The judge isn't saying that. The Department of Justice filed an anti-trust case in court, saying that a combination of Oracle and PeopleSoft would be anti-competitive. In the opinion of the DOJ, such a combination would turn what is a three-company ERP software market (SAP, Oracle and PSoft) into a two-company market.

Oracle argued that there are other competitors that do get into the market occasionally. Lawson is one and MS is another.

The judge is saying that the DOJ is wrong and that Oracle is permitted to pursue the PeopleSoft takeover since there are other competitors beyond SAP.

Re:Clarification? hostile bidding

[Anonymous Coward]

Hostile bidding, as I understand it, is when an entity (Oracle, in this case) places a bid for a controlling interest in another company. If 50% + 1 share of PeopleSoft is publicly traded, it is susceptible to a hostile takeover as someone could simply buy up all the shares that are out there and thus own a controlling interest.

Now, some shares are not for sale, and when a company IPOs usually the owners keep a lot of their stock in their personal coffers (not for sale or waaay too expensive) so usually the target company's board is made an offer. Peoplesoft does not have enough of its' own shares to prevent Oracle from acquiring a majority, I guess.... hence the "if you won't accept my offer I'll buy you anyway, motherfucker!" hostility.

As I understand it, anyway.

Re:Point

[balzak]

Actually, you both are correct. PeopleSoft is an applications vendor, so we help companies keep track of their stuff (money, employees, customers, etc.) which is not easy to do when the company gets large (this is an admittedly very simplified explanation of what we do). On the surface, Oracle seeks to acquire Psoft, kill the product off (bug fixes only), and convert its customers over to Oracle applications on Oracle's database. For a very large segment of ERP customers world-wide, this will mean that they will need an Oracle database and support staff in house (expensive) ... and once they have one Oracle DB, others will follow. So, one reason they want to acquire Psoft, and there are many, is that they need some way to keep their DB market share from eroding (the database market is, I'm guessing, probably 70% of their revenue). Oracle's DB market share is and has been eroding (there is an IDC report on it here: http://searchoracle.techtarget.com/originalContent /0,289142,sid41_gci910853,00.html ) for some time and it will continue until Oracle lowers its prices to meet comparable products like DB2/UDB, MSSQL, and Sybase. In either case (lower prices or fewer units sold) they will be losing money as time rolls on ... and they know it. Acquiring Psoft and shutting it down will corral customers into running Oracle DB whether they like it or not and provide applications revenue assuming they don't go with SAP. Also, the victims, I mean customers, will be paying higher prices because they don't have a choice of going with PeopleSoft on DB2/Linux, or MSSQL/Windows, or whatever.

Re:Let me get this straight

[jadavis]

I thought this was some sort of forced-takeover issue.

You may have been confused because it's a hostile takeover.

That means that Oracle is trying to take over PeopleSoft, while PeopleSoft is resisting the takeover. Oracle simply tries to buy as many shares as it can until Oracle has a controlling share. The target firm (PeopleSoft) is resisting because they don't think it will ultimately be good for PeopleSoft, but if Oracle gets the controlling share then they can't do anything.