Judge: Oracle Bid Can Proceed

U.S. District Court Judge Vaughn Walker, who spent four weeks last June presiding over Oracle's case against the Department of Justice, ruled Oracle can pick up its pursuit of the enterprise applications vendor.

Roger Harris, general manager of PeopleSoft partner MSS Technologies, Denver, cautioned that the ruling hardly represents the end of Oracle's work. "This is one hurdle, but that doesn't mean [the buyout] will happen. It just means it could happen. Tomorrow we will do demos and talk to the issues--just as we have the past several months. We are not ready to fold up the tent yet," he said.

In his ruling, Judge Walker said the government had not proved its case that "a post-merger Oracle would have sufficient market shares in the product and geographic markets" or that "a post-merger Oracle and SAP would likely engage in coordinated interaction" in pricing. In fact, the government lost on nearly every count it put before the court.

R. Hewitt Pate, Assistant Attorney General in charge of the DOJ's Antitrust Division, issued a statement expressing deep disappointment and said the DOJ is considering its options. One recourse is to appeal, and Judge Walker stayed his order for 10 days to give the government time for such an action.

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Oracle lost no time hailing the decision and, on its Web site, ran a statement from Chairman Jeffrey Henley saying, "This decision puts the onus squarely on the board of PeopleSoft to meet with us and to redeem their poison pill so that the shareholders can accept our offer."

To stave off Oracle's bid, PeopleSoft's board created a so-called poison pill, an anti-takeover measure that offers customers refunds of up to five times their license fees if the company is acquired and major product changes are made.

During its trial, Oracle had steadfastly maintained that the enterprise applications market would soon be under attack by Microsoft. To counter that eventual onslaught from the world's largest software maker, Oracle CEO Larry Ellison said Oracle needed to beef up its own applications. And for that, Ellison testified, Oracle needed more customers.

Some solution providers question Ellison's assumptions.

"The new products coming out of PeopleSoft are pretty strong, and people are not just going to port over to Oracle," said Paula Milano, president of PeopleSoft solution provider Axion Solutions, Irvine, Calif. "And if customers do have to make that decision to move to something new, they will look also at Microsoft and SAP. It's nave to think Oracle can just milk the installed base for the maintenance revenue."