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PeopleSoft CEO Firing Was Last-Ditch Attempt To Avert Takeover, Analysts Assert

The research firm Yankee Group says the new CEO, PeopleSoft founder Dave Duffield, could rally the forces.

There's plenty of speculation about PeopleSoft Inc.'s fate since CEO Craig Conway was fired late last week. The changing of the guard could be an effort to "steady the ship" and bolster shareholders' resolve in keeping the company independent, one research firm says.

In a report released Wednesday, the Yankee Group suggested that PeopleSoft decided to oust Conway and reinstate company founder Dave Duffield as the company's leader as a last-ditch effort to fight Oracle's proposed $7.7 billion takeover bid.

In its research note, Yankee analysts wrote that the firm "believes PeopleSoft's executive team is clinging to the hope that Duffield can muster support to prevent shareholders from voting in favor of the buyout, but is largely resigned to the takeover."

PeopleSoft board member Steven Goldby testified yesterday that PeopleSoft would consider a buyout if the price was right and the deal closed quickly. Goldby testified during a Delaware trial deciding a lawsuit brought about by Oracle to invalidate PeopleSoft's corporate antitakeover measures.

Goldby also testified that leading enterprise application vendor SAP has been the chief beneficiary of the long-running takeover fight between the two companies.

SAP agrees. "Although the takeover bid has created turmoil between the two companies, Oracle and PeopleSoft, business for SAP has been good," Shai Agassi, a member of SAP's executive board, told InformationWeek at this week's TechEd 2004 Conference in San Diego, Calif.

On the stand Wednesday for the trial's third day, Conway testified that he did try to block the hostile takeover bid. The Delaware case is expected to last two weeks.

The recent partnership between IBM and PeopleSoft, announced one week before Conway's dismissal, increased the hostility between PeopleSoft and Oracle, the Yankee Group also said in its research note.

IBM and PeopleSoft disclosed they would work to get PeopleSoft's business software integrated and standardized with IBM's middleware as well as develop tools such as WebSphere Portal, WebSphere Business Integration, WebSphere Application Server, and WebSphere Studio Application Developer. The five-year partnership calls for a joint investment of $1 billion for employee resources, marketing, and sales programs.

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