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

Point

[leonmergen]

Well, I think they do have a point there... there is plenty of competition around in the database market, and Oracle would still have to compete in a 'real' way - as far as I can see they can't be able to abuse their market position, simply because there's enough competition.

On the other hand, a big corporation getting even bigger isn't really a good thing...

Re:Point

[lucabrasi999]

there is plenty of competition around in the database market

This case not related to the database market. Oracle is trying to acquire PeopleSoft in order to improve their position in the applications market. This includes things like HR, Payroll, Accounting and Purchasing systems.

Re:Point

[Ronald Dumsfeld]

Well, I think they do have a point there... there is plenty of competition around in the database market, and Oracle would still have to compete in a 'real' way - as far as I can see they can't be able to abuse their market position, simply because there's enough competition.

This ain't about competition in the database market, it's about competition for ERP software. These work on top of a database, and many ERP packages allow you to choose the underlying database.

I think this is a dreadful decision, Oracle's ERP offering is horrid, and the intent is simply to kill a competitor. If the takeover does go through I hope the clients Oracle is hoping to acquire go elsewhere. What is even more scary is to discover that Microsoft has considered buying SAP. That would instantly give MS a huge market share in back-end business software. You can bet that SAP on non-MS platforms wouldn't be kept up to date with features despite the fact that it runs like a two-legged dog when implemented on Windows.

Re:Point

[Anonymous Coward]

Microsoft have considered buying SAP have they? Don't make us all laugh now. SAP is as big, if not bigger, than Microsoft. Now, Microsoft and SAP were at one point talking about a merger but it was only ever at a very simple level, and nothing ever came to it. Besides which if Microsoft and SAP were to announce a merger the DoJ and EU Monopolies Comission would have a field day.

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...

Re:Point

[andy1307]

I think this is a dreadful decision, Oracle's ERP offering is horrid, and the intent is simply to kill a competitor.

If Oracle "killed" Peoplesoft, customers would simply move to SAP. This takeover will tie peoplesoft to the oracle database product. With Oracle moving to support linux, maybe we'll see more linux support. More enterprise applications running on linux is always a good thing. There is only so much economic value to a gameboy running linux.

Re:Point

[popeyethesailor]

Microsoft did consider buying SAP, but has given up and bought Great Plains.

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.

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.

Well, this is just great.

[senatorpjt]

There's a HRMS from PeopleSoft at work to handle payroll, the thing doesn't work as it is, and this certainly isn't going to help.

It's a good thing I still demand my paychecks printed on a piece of paper in an envelope I can carry to the bank myself.

Re:Well, this is just great.

[Anonymous Coward]

I still demand my paychecks printed on a piece of paper

Yeah I agree, writing electronically is overrated and how can you be sure what you wrote is your words that you wrote; I mean there isn't any proof. like the other day, UPs dropped of a brand new computer that I supposdely didn't write on an electonic order form and yet it still arrived. Hmmm - tin foil anyone?

Re:Well, this is just great.

[LostCluster]

It's a good thing I still demand my paychecks printed on a piece of paper in an envelope I can carry to the bank myself.

Funny, I perfer "Direct Deposit", "ACH Transfers", and "Online Bill Pay" because when properly configured computer systems move my money, I see there less risk of it going wrong. Paper checks can get lost in transit and take several days to clear, but with electronic transfers the transaction clears instantly and I get access to the money that's rightfully mine immediately rather than having to wait up to a week for processing to happen.

Re:Well, this is just great.

[PreviouslySeen]

It's a good thing I still demand my paychecks printed on a piece of paper in an envelope I can carry to the bank myself.

My question would be if it isnt handling payroll/hr as it should be, Is what printed out on a paper check what it should be? The company that does our payroll uses peoplesoft and I check the direct deposit statement very carefully every pay period.

Re:Well, this is just great.

[Otter]

I prefer direct deposit because it eliminates the (disturbingly likely) possibility of my spilling ketchup on my paycheck or putting it in my pocket, forgetting about it and running it through the washing machine.

Re:Well, this is just great.

[qray]

My paycheck once took a trip around the country. Took over a week to get there.

My rent check took a month to get to my landlord and lived a few blocks away.

Oh, and when you deposit a check. The banks now just make a copy and shred the original. So you're really not any better off using paper. Do a news search for Check21

Re:Well, this is just great.

[TykeClone]

Check 21 is not effective until October 28. Until then, we're still moving massive amounts of paper around the country every day.

On October 29th ... we'll still be moving massive amounts of paper around the country every day.

Check 21 will catch on, but it will probably build slowly at first.

Re:Well, this is just great.

[qray]

Most banks are going to reproduce their own checks rather than relying on the fed to do it. That was the actual system I was working on.

I imagine there's a compiled list of banks accepting electronic checks and/or a list of ones that don't. All incoming checks get shredded, and the ones that go to banks that can't handle electronic transfers get the replacement check.

I agree the savings doesn't seem like much, but when you're talking large banks and millions of checks a penny or two can make quite a difference.

well

[nial-in-a-box]

Anything that kills PeopleSoft is a good thing. I don't care how many people use it or how well it may work for some people, it is the Windows of its market (i.e. poorly made, difficult to support, and unreliable as hell, especially when not configured perfectly).

Re:well

[lucabrasi999]

Anything that kills PeopleSoft is a good thing.

Trust me, the rumors I hear regarind Oracle applications say that their apps all that much better than PeopleSoft. In fact, some people think they are worse. If these rumors are true, then this potential takeover would result in one poorly made software system replacing another poorly made software system.

Re:well

[Undertaker43017]

Sadly most of the choices in large ERP/OSS software are poor.

IMHO, it's because most of them are old, complex and the architectures have not been updated.

while I do not want to see Oracle get People Soft,

[WindBourne]

it struck me odd that this admin all but drop the MS case, but wase persuing this one. Too be honest, the admin had little to no chance of winning it, as SAP is the big boy and MS is looming.

But I have wondering why they did persue this one? hummm. payoffs anybody?

not out of the woods

[Anonymous Coward]

First point is that this has nothing to do with databases. It is to do with ERP apps of which there are currently 3 major players: SAP, Oracle and Peoplesoft. If Oracle is successful there will be two. Hard to see how this is not less competition, though SAP is so much the market leader that the Oralce/Peoplesoft combined company might be useful to their customers. Its worth noting that Oracle still faces an EU investigation into the bid and, if successful, will to overcome an implacably hostile Peoplesoft board, oh, and gain the support of shareholders for its $7.7bn bid. Also the DoJ has 60 days to appeal Judge Walker's decision.

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:not out of the woods

[jedidiah]

ERP systems are far less interchangeable than low quality hamburgers. Claiming that there are hundreds of Lilluputians in the market does nothing to counter the problem of market dominance by a few small players.

The Judge's reasoning would only work if someone could point to a 4th player willing, ready and able to take up the slack when the #3 player sabotages the #1 player.

Re:not out of the woods

[Undertaker43017]

I totally agree. I work for one of those small players, and we are very glad to see this end quickly (we were pissed that our money was being used to fight this in the first place).

Even beyond the small players, MS is in this market now, and while they are not a big ERP player today, MS doesn't get into a market that it doesn't want to dominate. MS could easily be considered a viable #4.

Be interesting to see if they actually acquire now

[base3]

Oracle's real interest was making sure that PeopleSoft didn't acquire J.D. Edwards--but Oracle failed in that endeavor. I don't think Oracle actually wants to buy PeopleSoft, but is now forced to "go through the motions," lest they be caught in their act of blatant tortious interference in trying to sabotage the Edwards deal. My guess is that Oracle will lowball the offer and now allow the issue to die. This doesn't even consider the poison pill provisions allowing PeopleSoft clients refunds if Oracle buys PeopleSoft.

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:Be interesting to see if they actually acquire

[Nixoloco]

This doesn't even consider the poison pill provisions allowing PeopleSoft clients refunds if Oracle buys PeopleSoft.
fyi..
The poison pill provisions are separate from the refunds. The "poison pill" allows them to release more common stock to make it very costly for Oracle to gain a majority share. The refunds were something they implemented to allow their customers to get their money back if the takeover goes through.. which was to help their current sales and again to be an additional deterrent to Oracle.

Clarification?

[Mr. Bad Example]

Could someone more business-savvy than I am (which includes most animals with at least a notochord) explain "hostile bidding" to me? Right now I have this image in my head of Larry Ellison saying "I'll give you a hundred million dollars, motherfucker", and that can't be right.

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: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.