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IBM deal with PeopleSoft in doubt following Oracle takeover

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15th Dec 2004
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IBM's deal with PeopleSoft to use its WebSphere application server technology could be among the first casualties of Oracle's success in buying out its rival software firm.

A firm plank of the PeopleSoft board of director's last ditch attempt to keep shareholders on side was to emphasise its close links with IBM going forward. In September, PeopleSoft announced it was deepening its ties with IBM and planned to work with the computer giant to optimise its applications for use with IBM's WebSphere middleware and development tools. It would also sell WebSphere products directly through its own sales force.

But Oracle co-president Charles Phillips made it clear this week that this agreement is far from set in stone. "It's not clear what PeopleSoft committed to do with WebSphere," he said. "We're not sure they signed a contract. We have a strong application server that we think is better. We are not interested in adding more IBM technology to the stack."

Phillips also lifted the lid on some other product plans. Oracle will finish and then sell PeopleSoft 9, the next version of the PeopleSoft's enterprise software suite. "It is just another release with some enhancements," Phillips said. There will also be at least one more version of the JD Edwards product, called JD Edwards 6.

PeopleSoft's ISV and reseller partnerships will be scrutinised, but Phillips said he was keen to develop many of these, not abandon them. "PeopleSoft has over 200 ISVs. A lot are valuable to us, while others won't fit as well," Phillips said.

Phillips said he was confident that the merger and the subsequent integration efforts for the two companies would move quickly and smoothly. "The likeliest scenario is that the deal could be closed in terms of us having the keys around December 30th," he said. "After that time point, we will obviously move forward and PeopleSoft employees will be Oracle employees. Operationally, we think we will hit the ground running in January; the new organsation will be in place by then."

Asked how many of PeopleSoft's 11,600 employees Oracle is likely to retain, Phillips said: "I don't have a hard number for you at the moment. As a matter of emphasis, we have more interest in keeping the developers and support organisation than administrators."

He added that with PeopleSoft out of the way, Oracle's new found enthusiasm for mergers and acquisitions would move on to its next targets. Asked if the next name on the hitlist was Siebel, Phillips demurred to comment specifically. "We have said that we are looking at multiple acquisitions," he said.

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