PeopleSoft Power Play


Over the past 15 months, Conway had waged a bitter battle to repulse Oracle's hostile $7.7 billion offer for PeopleSoft. In so doing, he appeared to have the full backing of PeopleSoft's board. No one figured Conway to be a goner. But gone he is.

The PeopleSoft board "lost confidence" in Conway's ability to lead the company, board member A. George Battle said on a conference call Friday.

PeopleSoft founder and Chairman Dave Duffield has assumed the CEO title.

"I'm here for the long term, totally energized. I can't imagine a better team of people to work with," Duffield told press and analysts on the call. Duffield had been CEO until Conway was named CEO in September 1999, four months after he joined the company as president and COO.

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ERP solution providers said this move signals that the company is ready to talk turkey with Oracle about its bid. "It's clear that Oracle's business strategy is focusing on the apps side, and this is obviously a move by PeopleSoft to soften their position on this acquisition," said Ron Zapar, president of Re-Quest, a Chicago-based Oracle partner.

Zapar said Conway, a former protege of Oracle CEO Larry Ellison, took the takeover battle too personally. "There is no love lost between Conway and Ellison," he said. Ellison hires top-notch people like Conway, Tom Siebel and Gary Bloom, "brings them up and at a certain level cuts their legs off," which often leads to ill will, Zapar said.

The mentor-former-student dynamic has colored the PeopleSoft-Oracle saga. There was even a public exchange between Ellison and Conway about whether the former wanted to shoot the latter's dog. Ellison also liked to repeat the tale of how a year before Oracle made its offer, Conway came to Ellison with a plan to merge the companies. The only sticking point, Ellison maintained, was Conway wanted to be top honcho.

While Duffield's appointment in no way means PeopleSoft will fold, it could defuse the public acrimony, said Dan Maude, president of Beacon Application Services, a PeopleSoft partner in Framingham, Mass. "It has become so much of a personal thing. Dave vs. Larry is a whole different thing. Dave's too nice, and Larry can't be Larry."

PeopleSoft executives repeatedly tried to separate Conway's ouster, apparently decided on Thursday night, from the Oracle bid. They stressed in a statement and again on the call that the company's Transaction Committee, composed of independent directors, had driven the company's Oracle response and that Conway and the committee were in agreement on the strategy.

Battle would not detail why Conway had fallen from grace, saying only that "there was no smoking gun, no accounting irregularities." The executives did not take questions on their Oracle strategy.

Also on Friday, the U.S. Department of Justice said it would not appeal a federal judge's decision that allows Oracle to proceed in its pursuit of PeopleSoft. PeopleSoft partners were jazzed about Duffield's full-time return but stunned to hear of Conway's departure.

"I probably shouldn't have been surprised, but when I heard, I couldn't believe it," said George DiGrandi, managing director of Premier Consulting Group, a Secaucus, N.J.-based PeopleSoft partner.

"[Duffield] may have a better chance of fighting off Oracle. Nothing negative about Mr. Conway, but Duffield had a way of working with customers and employees. He was the heart and soul of the old PeopleSoft, and this may be a way to bring some of that back," DiGrandi said. "I don't think PeopleSoft and Oracle ever would fit culturally, and with Dave back in the lead, that cultural chasm gets wider."

ROCHELLE GARNER contributed to this story.