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Was it worth the effort?

On the eve of a decisive court confrontation, CNET News.com's Charles Cooper takes the measure of Larry Ellison's pursuit of PeopleSoft--and finds it wanting.

I don't know whether Larry Ellison's completely lost it or if he's so darned smart that the rest of us are simply dolts by comparison.

That question will provide at least another six to nine months of bar stool arguments. And that's how long it will likely take for Oracle to hurdle all the obstacles blocking its proposed takeover of PeopleSoft. By then, we should have a clear idea whether it was inspired genius or the silliest idea since AT&T's wasted multibillion-dollar acquisition of NCR.

Ellison's idea of diplomacy is to put a couple of caps into Craig Conway's dog.
In the meantime, this year-long novella reaches a milestone when lawyers for Oracle and the U.S. Department of Justice conclude their arguments in front of a San Francisco magistrate next Tuesday. So far, Oracle appears to have made the stronger case, but it's anybody's guess how the court will ultimately rule. The irony is that defending against antitrust charges is relative child's play when compared with the enormity of making a multibillion-dollar software takeover work in practice.

Back when Charles Wang was running his own show as CEO of Computer Associates International, he orchestrated two decades' worth of acquisitions. Some were welcome; others were not--but the track record speaks for itself. To be sure, CA had a reputation for buying companies and then firing most of the employees. It was ugly, hard and cold--but it paid off in the coin of higher sales and earnings year after year.

IBM similarly pulled off a successful--albeit unwanted--takeover of Lotus Development in 1995. But then-CEO Lou Gerstner essentially bribed Lotus' board by paying a ridiculous premium for a company whose stock was taking a nosedive. Gerstner, ever the pragmatic diplomat, also went out of his way to romance Ray Ozzie, the creator of Notes, the groupware program especially coveted by Big Blue.

Ellison won't ever be mistaken for the second coming of Count Metternich. His idea of diplomacy is to put a couple of caps into Craig Conway's dog and then give his former underling a hotfoot at the signing ceremony. Of course, it will be a cold day in hell before Conway, now PeopleSoft's CEO, ever gives him that satisfaction.

And so that's why this struggle wound up getting fought out in the courts.

However, defeating the Justice Department doesn't guarantee Oracle a victory. It still must wait until next spring to put the acquisition proposal to a PeopleSoft shareholder vote.

The FUD campaign orchestrated by Ellison and his cohorts may be working, but if that's all it takes to throw Conway off his game, then PeopleSoft's in a world of trouble.
Oracle first needs an OK from the Delaware Court of Chancery to remove the poison pill provision in PeopleSoft's bylaws. Then the company must wait until PeopleSoft's next shareholder's meeting to submit the acquisition bid to a vote.

And if all that wasn't problematic enough, there are also the Europeans to win over. Don't dismiss that as an afterthought. If Ellison wants to hear how seriously "Old Europe" treats big combinations of power, he should pick up the phone and ask Steve Ballmer to share a few anecdotes.

The modern computer industry has never witnessed such a spectacle. Skeptics--and there is no shortage of them--say the PeopleSoft bid is distracting Oracle's executives from more immediate concerns. Just look at the company's lousy stock price, down more than 30 percent from its 52-week high--and this while many stocks trading on the technology-heavy Nasdaq have done relatively nicely.

None of this outwardly perturbs Ellison, though it should. Outside of the chuckles he'd get humiliating Conway and proving the naysayers wrong--"I am Larry, I am good"--what's so wonderful about seeing this acquisition through to completion?

It's not at all clear that PeopleSoft is such a terrific catch--not anymore. PeopleSoft is struggling to digest its own acquisition of another company, J.D. Edwards. What's more, there are signs that the problems may be more serious than the usual hiccups associated with mergers.

Earlier this month, PeopleSoft warned of a sales shortfall in the quarter, blaming its troubles on Oracle. If you believe that one, I've got a bridge in Brooklyn to sell you. The fear, uncertainty and doubt campaign orchestrated by Ellison and his cohorts may be working, but if that's all it takes to throw Conway off his game, then PeopleSoft's in a world of trouble.

Before he slips into his afternoon repose, the Buddha of Redwood Shores, Calif., should contemplate that idea for quite some time.