What analysts are saying

By Analysts at AMR Research | 12 Jun 2003

1
The immediate reactions of analysts have been critical of Oracle. Here is a sample.

"Gartner believes that Oracle's offer to buy PeopleSoft goes well beyond application markets and is a broad market control move, including applications and infrastructure. It follows PeopleSoft's plan to acquire J.D. Edwards. If the deal goes through, Gartner believes it will disrupt Oracle and its customers in the short term. In the long term, Oracle will benefit by removing an enterprise application competitor; Oracle customers will feel little long-term impact."

The Gartner statement goes on to state: "This announcement will raise market concerns about PeopleSoft's long-term independence. In Gartner's view, the deal's completion would pose significant long-term disruption for PeopleSoft's customers because they will feel pressure either to migrate to Oracle applications and infrastructure or to find alternatives. If you're making imminent purchases from Oracle or PeopleSoft, watch developments closely …"

Given the low bid price, says a Frost & Sullivan analyst, it is unlikely that PeopleSoft would accept the Oracle bid. The Oracle plan to shift PeopleSoft customers to Oracle's E-business suite will also make a large number of the target company's employees hostile.

Analysts at AMR Research believe that the $5.1-billion Oracle bid for PeopleSoft should elate rival SAP. The reason: Oracle's plan to shift PeopleSoft customers to the Oracle platform puts all of them "back in play", giving SAP an opportunity to grab a sizable proportion.

Analysts at the Meta Group are reported to have commented that if it works out, the proposed acquisition will hurt PeopleSoft customers since Oracle has said it will not sell new PeopleSoft applications, and will eventually migrate PeopleSoft customers to the Oracle E-business Suite. And the migration from PeopleSoft will not be easy. Upgrade from PeopleSoft 7 to PeopleSoft 8 could get complicated. Either way, costs are likely to escalate.

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