Answering questions at Oracle's AppsWorld conference in London on Wednesday, Chuck Phillips, executive vice president and former analyst at Morgan Stanley, said that although Oracle would prefer to buy PeopleSoft on its own, the software giant has not ruled out purchasing a combined PeopleSoft/J.D. Edwards.
"We have not yet made a decision if we want J.D. Edwards or not. If it comes down to buying them both, we are not ruling it out," Phillips said.
Phillips claims that Oracle has been considering a bid for PeopleSoft for more than a year as part of its "five year plan" to increase pressure on arch rival, and market leader, SAP.
If the hostile takeover does go through, Phillips estimates Oracle could lose around 30 percent of PeopleSoft's customers to SAP over the next ten years. "Our goal is to keep all of the PeopleSoft customers but the highest risk is companies that have SAP financials and PeopleSoft HR software. We are going to do everything we can to prevent (losing those customers), but it is already going on," he said.
He also indicated that Microsoft and 'free' open-source applications posed a threat in the longer term: "We have to worry about the whole open-source thing, although it is not a factor today -- five years ago Linux wasn't a factor, but it became one. SAP has a huge market share and has been gaining relative to us and PeopleSoft over the last eight quarters. Together, Oracle and PeopleSoft would give SAP a run for its money and protect us against Microsoft," he said.
According to Phillips, whatever happens with the PeopleSoft deal, more acquisitions are on the way: "As part of our five year plan, we need more products, distribution channels and partners. You can't develop these things quickly, so you will hear about some acquisitions -- there are certain vertical markets that we want to get into."
Phillips thinks it is unlikely that the proposed takeover would cause antitrust problems, which, he said, is one reason why PeopleSoft's board refuses to discuss the deal: "Even if you combine PeopleSoft and Oracle -- using IDC numbers -- we would have 10.8 percent market share while SAP would be at 18 percent, so it wouldn't even close the gap."
