The Waiting Game

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Business & Technology Journalist- Stuart LauchlanTypical! You wait years for a decent takeover battle in the applications software business, then two come along at once. And how ironic that it's the smaller of the two that's by far the more interesting right now.

Pivotal - what an unlikely company to become so, well, pivotal to the future shape of the CRM mid-market! From being a somewhat down on its luck vendor touting itself around the industry looking for a new home, it finds itself the much sought-after subject of unwanted attentions from two other companies.

Of course, the timing couldn't be worse for this sudden rise to prominence, coming as it does after a nice little merger with Talisima had been worked out. Where will Pivotal end up? Most likely with its planned merger going through I suspect, followed sharply by a decision on the part of Onyx to make a hostile bid for the resulting combined beast.

But hold on, haven't we been here before - and not that long ago either? Oh yes, PeopleSoft was set to merge with JD Edwards when along came Oracle with a hostile bid for the former. PeopleSoft pushed through the merger, so now Oracle is bidding - or trying to bid - for the combined entity.

Or is it? The Oracle/PeopleSoft saga has dragged on for months now and the bad news is that it will be next year before it can be resolved. Nothing is going to happen now until the Justice Department in the US makes its ruling on the potential anti-trust implications.

Even if that goes in Oracle's favour, there are the Eurocrats in Brussels waiting to make their own ruling in April, although no doubt many of them would be 'far happier if the Justice Department takes the decision out of their hands and comes down against Oracle before they have to stick their necks out'.

On the face of it, it looks like bad news for Oracle, but maybe it isn't. As PeopleSoft CEO Craig Conway blurted out this week, the delay to the ruling simply fuels fear, uncertainty and doubt about the future of the vendor. And Oracle can be awfully good at FUD when it wants to be.

It would be far more helpful to PeopleSoft to get this over and done with as quickly as possible. April is effectively two fiscal quarters away. While Conway has been banging an upbeat drum about the prospects for the merged JD Edwards and PeopleSoft, there are those in the analyst community who reckon that it's not going to be that simple.

Yes revenues will be up, but then they would be - they now include JD Edwards turnover after all - but is it sustainable? And what will the impact on the bottom line be of merger and redundancy and integration costs? Could it be that these more unpleasant aspects will be coming to the fore around about March/April next year?

Of course, if the regulators come out against Oracle, then it won't matter. But if they clear the bid and PeopleSoft isn't in as healthy a financial state as it currently leads us to believe it will be, then Oracle might find itself in quite a beneficial situation.

All of this could be idle speculation of course. Maybe it'll all work out fine and dandy for Conway. But I suspect that his comments this week indicate that he's all too aware that it's his rival Larry Ellison who is the one who can't really lose from having to play a waiting game.

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