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PeopleSoft customers wary of deal

IT executives using PeopleSoft products try to make sense of the proposed buyout.

PeopleSoft customers reacted cautiously Friday to the possibility of an Oracle buyout, with some of them worrying that the deal would hinder customer support.

Oracle on Friday said it would launch an unsolicited bid for PeopleSoft for $5.1 billion in cash. The hostile bid, which comes only days after PeopleSoft announced it would buy rival J.D. Edwards for $1.7 billion, would boost Oracle's market share in the business application market.

Oracle chief executive Larry Ellison heightened fears among PeopleSoft customers with comments that indicated a short life for PeopleSoft products if the buyout happens. "Although we will not be actively selling PeopleSoft products to new customers, we will provide enhanced support for all PeopleSoft products," Ellison said. "Furthermore we will be incorporating the advanced features from the PeopleSoft products into future versions of the advanced Oracle eBusiness Suite."

Ray Johnson, vice president and chief information officer of New Orleans-based energy producer Entergy, said he wondered how well Oracle would support existing PeopleSoft installations. Entergy uses PeopleSoft products to manage its human resources operations.

"Entergy is monitoring this situation closely," Johnson said in an e-mail interview. "We have been a long-time user of the PeopleSoft product suite. These products were chosen because of their feature (and) function capability--and because they are well-suited for the Entergy business system. Any change in product offerings and support will receive careful review on our part."

Jen Ibanez, director of operations for Denver-based staffing management company Remy and a PeopleSoft customer, thinks that PeopleSoft will prevail, preserving her company's ability to support clients.

"We have faith in PeopleSoft's abilities as well as its secured position in this market," said Ibanez. "I really think more so than ever it will have a negative effect on Oracle."

"I won't say we were shocked," she added. "It wasn't that big a surprise to see Oracle try to derail PeopleSoft after the J.D. Edwards deal. That bumped Oracle back to third spot, as far as applications go."

Ibanez participated in Remy's decision to buy PeopleSoft's human resources and financial software, purchases that she said paid for themselves within six months.

Oracle customers also struggled to make sense of the deal. Gary Hensley, director of information technology for Odwalla, a Coca-Cola beverage subsidiary located in Half Moon Bay, Calif., questioned the reasoning behinds Oracle's move.

"As an Oracle customer, this announcement leaves me wondering what Larry's thinking," he said. "You have to wonder: Was he so taken aback by the PeopleSoft offer for J.D. Edwards that he wanted to one-up them and put Oracle in a better position? With a leader like that, it doesn't surprise me."

Hensley was also concerned about support, saying integration efforts could drain resources from existing Oracle products. "If Oracle does the deal, we'll probably stay with Oracle," he said. "However, I would wonder about Oracle's ability to take on as large a business as PeopleSoft."

But the benefits might outweigh the risks for Oracle customers, Hensley said. "If they bring some of the PeopleSoft (development) talent into the fold (at Oracle), that might be a good thing for us," he said.

CNET's Mike Ricciuti and Evan Hansen contributed to this report.