Oracle: The Deal's Not Dead YetOracle: The Deal's Not Dead Yet

If PeopleSoft CEO Craig Conway really believes Oracle's $6 billion hostile takeover bid is a dead issue, he may want to take note of what Oracle executive VP Chuck Phillips has to say on the topic.

With Conway just 100 miles away telling a gathering of PeopleSoft customers in Anaheim, Calif., not to worry about a potential takeover, Phillips told an audience at the Oracle Applications User Group's Connection Point conference in San Diego that the bid is still very much alive. He advised PeopleSoft customers--many of whom also are Oracle customers--to ignore campaigning against the deal, which is being scrutinized by the U.S. Department of Justice before Oracle can accept tender offers from PeopleSoft shareholders.

"The shareholders are the owners of the building, and he's just the manager," Phillips said of Conway. "It's up to the shareholders, and it's up to the Justice Department, and that's it. These are the two critical paths."

Most of the concerns among PeopleSoft customers center around issues such as future support of PeopleSoft products, and whether they'll be forced to migrate to Oracle platforms if the deal goes through. Phillips' message to them: Oracle will make sure that support isn't an issue, and it will not force a migration. The company says it will support PeopleSoft products for 10 years. "We're pretty confident when we say that support will get better, not worse," Phillips said.

As to whether Oracle would support J.D. Edwards products now that PeopleSoft has completed the $1.7 billion acquisition of it smaller rival, Phillips said that would depend on what PeopleSoft did with the acquired products between now and the time Oracle's offer is accepted--if it is.

Allison Shurtleff, computer operations manager for the sensors and controls division of Texas Instruments Corp., wanted to know whether a company running PeopleSoft's human-resources module in tandem with an assortment of Oracle E-business applications would get a price break on Oracle's HR module if it decided to make a switch. Phillips surprised her by telling her that Oracle would, in fact, swap the two at no charge. "That helped a lot," Shurtleff said later. "I thought we were going to get a discount, but we'd get Oracle HR for free." She said the takeover bid and Oracle's promises to make the transition smooth for PeopleSoft customers indicates the company's confidence that its HR application--long seen as inferior to PeopleSoft's--is ready for prime time.

Phillips, who has maintained that Oracle has the ability to take on a second acquisition of similar scope, aimed to put to rest any fears among Oracle customers that the deal would overextend the company and create a future financial crunch. "We wouldn't pay a price that would do anything to jeopardize the Oracle franchise, or jeopardize Oracle customers."

But Phillips, who was a software analyst at Morgan Stanley Dean Witter & Co. before joining Oracle earlier this year, also was realistic about the task of getting enough PeopleSoft shareholders to accept the offer. He knows Conway and his crew will dig in if the Justice Department signs off on the proposed deal, which Phillips expects will happen by the end of November. He suggested the battle could last until next July, and he sounded like he was looking forward to it. "If we get past the DOJ, then the other stuff starts to get fun."

With Phillips in the hot seat after 17 years on Wall Street, Oracle Applications User Group president Art Hunt wondered what he thinks about the things now being written about him by his former peers. "I try not to read that stuff," Phillips quipped.