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Oracle says it still wants PeopleSoft

The software maker remains committed to its merger bid despite a number of obstacles. One action it plans to take is to nominate an alternative slate of directors for PeopleSoft's board.

Oracle remains committed to acquiring PeopleSoft despite a number of obstacles and a protracted regulatory review of the proposed merger, Oracle executives said Monday.

One action the company plans to take is to nominate an alternative slate of directors for PeopleSoft's board in January in order to comply with PeopleSoft's new shortened nomination deadline, Oracle Executive Vice President Safra Catz said on a conference call for securities analysts. A shareholder vote on the board seats is scheduled for the company's next shareholders meeting in June.

On the conference call, Catz and two other top Oracle executives emphasized their resolve to complete the unsolicited deal and accused PeopleSoft management of eroding the value of the company with a controversial money-back guarantee program.

"We remain committed to acquiring PeopleSoft," Oracle Executive Vice President Chuck Phillips said. "There is no merit to the proposition that the deal is dead."

The call followed recent media reports speculating that the U.S. Department of Justice may challenge the deal and that PeopleSoft's revised guarantee program could deter Oracle.

Oracle plans to finish submitting information for the Justice Department's antitrust review in the next few weeks and expects a decision from the regulatory body in January, Catz said. Oracle also expects the European Commission, the Justice Department's counterpart in Europe, will take less than the four months it's allowed to issue a ruling under its extended review process, she added.

Oracle Chief Financial Officer Jeff Henley accused PeopleSoft executives of obscuring PeopleSoft's financial performance to boost shareholder support for its merger with J.D. Edwards. Henley also said PeopleSoft may have improperly accounted for revenue during its third quarter because of the way it revised its customer rebate program. The program, which PeopleSoft started in June, would refund customers as much as five times the cost of their software if a company were to acquire PeopleSoft and discontinue its products.

In an October filing to Securities and Exchange Commission, PeopleSoft said it had amended the program, making it possible to trigger refunds without PeopleSoft being acquired. PeopleSoft should not have recognized revenue under the new refund conditions, Oracle argued.

"We believe they have a revenue recognition problem," Henley said.

PeopleSoft said it never actually made itself liable for the refunds in its customer contracts, but had misworded a description of the revised plan in a filing with the SEC. The company has corrected the mistake in the filing, said DeeAnna McPherson, a PeopleSoft spokeswoman.

"We're very confident that our revenue has been recognized appropriately," McPherson said.