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PeopleSoft flap may be hurting Oracle's image

Public opinion of the database giant sinks to 12-year low, a new report indicates.

Oracle's hostile takeover bid for PeopleSoft has fueled negative perceptions of the software company among corporate computer buyers, which could sap demand for its products, according to a report published on Wednesday.

The report, issued by market research firm Techtel, said one in four information technology professionals with an opinion of Oracle have a low regard for the company. Less than 50 percent of the 765 survey participants said they trust Oracle, compared with 80 percent declaring trust in IBM, said Bill Schaub, the report's author.

The survey, conducted in July, indicates Oracle's corporate image is in its worst shape in the 12 years that Techtel has been measuring it. The research firm surveys hundreds of IT buyers every quarter to measure their perceptions of numerous computer companies.

Other companies scoring relatively low in the image department in July's survey were Microsoft, Computer Associates and Germany's SAP. IBM, Symantec and Adobe Systems fared better, with positive perceptions soaring above 90 percent.

But Schuab singled out Oracle in his report, saying that respect for Oracle within the IT buying community has been on the wane for about a year. Though respondents weren't asked to explain their answers, Schaub guessed declining opinion of the company is related to the PeopleSoft battle, which began about 16 months ago.

"The opinion of software companies in general is down," Schaub said. "And the attempted acquisition of PeopleSoft has done Oracle no favors."

Oracle's June court battle with antitrust regulators over the PeopleSoft deal exposed business practices that may have further eroded esteem for the company, Schaub said. Among the trial's revelations was the rampant favoritism practiced by Oracle and its rivals, resulting in huge discounts for certain customers.

An Oracle representative declined to comment on the Techtel report.

The report also cast doubt on Oracle's financial health, saying that image problems often precede weaker demand and lackluster earnings. Specifically, Techtel research indicates that demand for Oracle's core product--its database programs--has stalled, while rival products from Microsoft and IBM are in strong demand.

The report led securities research firm Piper Jaffray to downgrade Oracle to "market perform" from "outperform" and lower earnings estimates. That news sent Oracle's shares down 2 percent on Wednesday to close at $9.86. The company is scheduled to report first-quarter earnings on Tuesday.