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Week in review: Tech brawl

The software sector's version of a backyard brawl has become a war of words and lawsuits, as Oracle continues its quest to take over rival PeopleSoft.

The software sector's version of a backyard brawl has become a war of words and lawsuits, as Oracle continued in its quest to take over rival PeopleSoft.

On Wednesday, Oracle raised its bid from $16 to $19.50 per share, valuing its target at $6.3 billion. The database giant also filed suit against PeopleSoft and J.D. Edwards, the application software maker that PeopleSoft has announced plans to acquire.

The increase in the bid wasn't enough, however, to satisfy PeopleSoft's directors, who rejected the newer offer on Friday. The investment community, too, sees the need for Oracle to pony up more money. "If Oracle really wants this property, it's well worth more than what they are offering now," said one portfolio manager. "I think they need to offer $25 to $30 a share, since it's a hostile offer."

The lawsuit and bid boost were in response to changes that PeopleSoft and J.D. Edwards made to the terms of their $1.7 billion merger, switching from an all-stock deal to a stock-and-cash transaction. The amended plan calls for PeopleSoft to pay $863 million in cash and issue 52.6 million shares of its stock in exchange for J.D. Edwards.

By offering a combination of cash and stock, the new deal removes some of the diluting effect the initial deal had on PeopleSoft shares. That's because by paying cash, the company must issue fewer new shares, meaning the deal will have less of an effect on earnings per share.

PeopleSoft is also offering money-back guarantees to customers to prevent them from fleeing to rivals in fear of a hostile takeover by Oracle. The software maker is adding a price-protection clause to customer contracts to keep sales from stalling as a result of a hostile takeover bid launched last week by the database giant, according to sources.

Oracle CEO Larry Ellison has said that, if a buyout occurs, he will discontinue PeopleSoft's product line. In response, PeopleSoft last week began offering customers a refund of a portion of their purchase price, should Oracle's takeover attempt succeed.

However, it's not a one-on-one fight. Connecticut?s attorney general said he plans to file an antitrust lawsuit against Oracle, seeking to defeat the company's proposed buyout of rival PeopleSoft. State leaders said in a statement that Oracle's proposed takeover would violate state and federal antitrust laws, "directly damage the state and its economy and raise prices for businesses, governments and consumers by significantly reducing competition in the markets PeopleSoft serves."

Down to business at CeBit
The corporate office took center stage at CeBit America, with most of the 25,000 attendees at the technology trade show being executives at large or midsize companies.

The office is the target for PalmSource, which is working on a new operating system called Sahara that the company hopes will make the Palm OS more useful in corporate settings. Sahara will include features to improve security, Web browsing, document reading, instant messaging and e-mail.

In addition, PalmSource described partnerships with IBM, Novell and Visto to add more business software for the Palm OS. The moves highlight the effort of Palm and its PalmSource division to appeal to corporate buyers who so far have proved reluctant to include handhelds among their companies' supported computing devices.

Gateway sought to reassure its business customers that it will remain a player in the world of business-computing hardware. The company underscored its point by revealing more details about its plans to launch a personal digital assistant, deliver a new rack-mount server and launch a line of network-storage products over the next few months.

Gateway's new PDA will begin shipping in the second half of July. The company fitted it with a 400MHz XScale processor from Intel, along with a 3.5-inch screen and dual Compact Flash and Secure Digital slots for adding modules for wireless networking or storing extra data.

Hewlett-Packard plans to launch a new line of iPaq PDAs, adding to a cavalcade of new HP mobile computing products that began to appear this week. Although the new iPaq PDA is expected to have many of the same features as current models, including a 400MHz Intel XScale processor and a 3.5-inch color screen, it will also come with Bluetooth technology, allowing it to establish a wireless link with other devices.

Turning up the heat on spammers
Intensifying its campaign against spammers, Microsoft filed 13 civil lawsuits against U.S. defendants, accusing them of spamming Microsoft customers with deceptive e-mail. It also filed two suits in the United Kingdom, where the defendants are accused of illegally harvesting Microsoft e-mail addresses for use in building spam mailing lists.

Microsoft accused the defendants in the 15 suits of being collectively responsible for sending the company's customers more than 2 billion unsolicited commercial messages. The software company singled out a number of specific e-mail practices in its suits, including deceptive and fraudulent messages, unsolicited pornographic messages and ads for sexual services, and false virus warnings.

Antispam sentiment is increasing on Capitol Hill, where one bill was voted out of committee and another proposal would set lengthy prison terms for senders of junk mail. The Senate Commerce Committee approved the "Can-Spam Act," which would let federal regulators and Internet service providers sue spammers who use forged e-mail headers, who do not let recipients unsubscribe, or who send bulk messages to e-mail addresses obtained through crawling the Web.

Also, Sens. Orrin Hatch, R-Utah, and Patrick Leahy, D-Vt., introduced the Criminal Spam Act, which would punish repeat spammers with up to five years in federal prison and fines of up to $25,000 a day.

Also of note
SCO Group upped the ante in an amendment to its suit against IBM, seeking more than $3 billion in damages for alleged copying of proprietary Unix intellectual property into Linux...Hewlett-Packard revealed some of the specifications for Advanced Micro Devices' upcoming Athlon64 chip, a processor that HP seems to be preparing to use in its PCs...The Recording Industry Association of America said it has sent cease-and-desist letters to five people whom it suspects of illegally offering massive amounts of copyrighted music through peer-to-peer networks...Sen. Hatch backpedaled slightly from his suggestion that copyright holders should be allowed to remotely destroy the computers of music pirates.