Oracle-PeopleSoft - now the real work begins

Philip Carnelley, Research Director

Oracle's latest, extended offer for PeopleSoft closes today, Tuesday Jan 4. Oracle expects to complete the acquisition this week, assuming it can obtain at least 90% of PeopleSoft's shares in response to this offer. It announced last Tuesday, December 28, that it had taken effective control of PeopleSoft. At that time, 75% of PeopleSoft's shares had been tendered in response to its offer of $26.50 per share, which valued the company at $10.3bn.

Oracle has moved quickly to assume control, appointing four executives to key PeopleSoft posts: Safra Catz and Chuck Phillips as co-presidents, Harry You as CFO, and Daniel Cooper as head of SVP, general counsel and secretary. The four already hold those positions at Oracle. Four PeopleSoft execs were replaced, including Kevin Parker, co-President and CFO. Catz, Phillips, Cooperman and You were also appointed to serve on PeopleSoft's board of directors, replacing Aneel Bhusri, Frank Fanzilli, Michael Maples and Cyril Yansouni. Also, PeopleSoft's Chairman and Chief Executive (and co-founder), Dave Duffield, has resigned from both of his posts and as a director of the company. This gives Oracle majority control of the PeopleSoft board. Two existing PeopleSoft board members are expected to remain in place until the merger is completed and then resign their positions.

So now the real work begins, integrating the PeopleSoft staff and products. This will be a major challenge, at both technical and organisational levels. The Wall Street Journal reported today that a first, significant step has been taken: Ron Wohl is to be replaced as head of Oracle's applications business by John Wookey, previously SVP for applications development. Wohl's future role at Oracle is not yet known. Assuming the report is correct, we consider this a very significant move. Wohl (who was one of the very first Oracle employees, joining in 1986) has been the "face" of Oracle applications for years, reporting direct to Larry. While some may argue Oracle should have done better, having been outperformed / outgrown by both PeopleSoft and SAP, nonetheless Oracle Applications has become a multi-billion dollar business - and Wohl was instrumental in that. A small, quiet and thoughtful man - but clearly one with strong views which he wouldn't be easily swayed from - he wasn't your typical Oracle executive! Nonetheless he kept a central role for many years. We don't know Wookey so well - we await with interest the unveiling of his plans. It would surely be good to put a key PeopleSoft executive in place either above or just below Wookey - but we're not sure who's left, or who would want such a post. Maybe PeopleSoft CTO Rick Bergquist? We also wonder whether Wohl will be sent to Pleasanton (PeopleSoft HQ) to take direct charge there and 'Oracle-ise' the new acquisition.

Philip is one of Ovum's leading analysts. He is responsible for Ovum EuroView, an advisory service which analyses the performance of European ICT markets and companies. He can be contacted directly on philip.carnelley@ovum.com.