Oracle Corp. president Charles E. Phillips Jr. addressed for the first time Tuesday the company's souring public image amid his company's 15-month battle to acquire application software vendor PeopleSoft Inc.
In an interview with SearchOracle.com, Phillips acknowledged that the lengthy and highly publicized court battle brought on by the U.S. Department of Justice (DOJ) took its toll on the company's image.
"We didn't expect this to be drawn out so long," Phillips said. "I think the payoff in the PeopleSoft acquisition is in terms of financial returns and the number of customers who will feel safer in their software investment, and that will more than offset anything that's going on with our public image."
A report issued earlier this month by market research firm Techtel said one in four IT professional held a low regard for Oracle. The survey indicated that Oracle's corporate image is in its worst shape since Techtel began researching the company 12 years ago.
Phillips attributed the long legal battle for PeopleSoft to his company's declining public image, as well as its falling business application software sales.
While Oracle's database sales have been a boon for the company, Oracle executives have acknowledged that their prolonged battle for PeopleSoft has resulted in poor sales of its E-Business application software suite. Oracle recently had its weakest quarterly sales of applications in more than five years, with business application software plummeting 36%, compared with one year ago.
"The PeopleSoft acquisition will obviously help because we'll have more customers to sell to," Phillips said. "We've got new products shipping in November and we're constantly investing in ourselves so we see the situation improving."
Oracle won a victory against the DOJ earlier this month, but the company still faces several other hurdles before it can move forward with a takeover of PeopleSoft.
The European Commission, which announced its intentions to launch an investigation into the takeover attempt, will weigh in soon on whether it will consider the merger. The DOJ also has 60 days to decide whether to appeal the decision to the Ninth Circuit Court of Appeals.
PeopleSoft CEO Craig Conway said this week at the PeopleSoft user conference in San Francisco that he will fight Oracle's hostile bid for his company until the bitter end.
"We know we've got some key hurdles to get across, but we're confident that we'll be successful," Phillips said. "We're getting the message across that PeopleSoft customers will benefit by being in stable hands.
Earlier on Tuesday, Phillips gave the keynote speech to about 700 Oracle users at the New York Metro Area Oracle User Group Day in New York City. He gave users a general overview of Oracle products and services and later answered questions.
In response to one user's question about the reason for the PeopleSoft acquisition, Phillips said the takeover attempt is key for Oracle's survival in the application software business.
"There aren't a lot of new customers out there so it's better to have existing customers, and this is all part of an industry shakeout," Phillips said. "From our perspective, PeopleSoft customers are very valuable and we'd rather have them come to us than someone else."
Phillips said PeopleSoft customers would benefit in Oracle's hands. While there are no plans to integrate the products together, Phillips said, support for PeopleSoft products will continue for the next 10 years, and PeopleSoft customers can transfer their existing licenses to Oracle for free.
Users at the conference Tuesday said they were optimistic with the prospects of Oracle taking over PeopleSoft products.
Robert Lepanto, who serves as president of the New York City Oracle Applications User Group, said he is sure Oracle will integrate many of the technologies within PeopleSoft to improve the human resources components to the E-Business Suite.
"Clearly, there are some features in PeopleSoft, particularly the HR components that have given them a great name," Lepanto said. "It's a mature market and consolidation is necessary to improve software for enterprises."
Mohandas Nayak, who serves as a technical team leader at New York City-based Monster Worldwide, which runs Monster.com, said he believes Oracle's E-Business Suite will improve over time. Monster recently completed an upgrade to Oracle 9i DBMS, along with nearly the entire E-Business Suite, Nayak said.
"It's all about maturity," Nayak said. "Customers expect more out of Oracle and Oracle knows that and wants to improve by making key acquisitions to improve its product."
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