Editorial Editorial (December 17, 2004)

Oracle and Pleasanton

Following the takeover of his company this week by Redwood City-based Oracle Corp., PeopleSoft's founder and recently re-appointed CEO and billionaire Dave Duffield can cash in his stock gains and go back to contributing to and managing his pet rescue foundation, Maggie's Fund. Ex-CEO Craig Conway, fired in October because of what many viewed as his "reckless exaggeration" to Wall Street analysts, will no doubt add $40 million in severance and stock appreciation to his 2004 earnings, which totaled $188 million in 2002, including options. But for most of PeopleSoft's other 11,255 employees, including 3,500 at its Pleasanton campus, the holiday season will be less than merry as they await word on whether they will stay employed in the newly merged corporation, have to start commuting to jobs in Redwood City or start job searches in the new year. Sure, many will see some gains in their PeopleSoft stock portfolios with the final sales price of $26.50 per share, or $10.3 billion, up from $19 just three months ago. Even so, their increased stock values will afford most only small gains that will hardly carry them and their families through much of 2005.

Oracle's flamboyant founder and chief executive Larry Ellison has assured PeopleSoft customers that Oracle will continue to produce and update its unique and much-liked human resources and other software applications for the next 10 years. Still, his personal disdain for former colleague Conway has peppered remarks he and other Oracle executives have made about PeopleSoft in the rancorous 18-month battle to complete the merger. In its court battle with PeopleSoft and in public comments, Oracle co-president Chuck Phillips said the Redwood City high-tech giant might cut 6,000 or more PeopleSoft employees at the start, with an Oracle selection team to look at others it may want to assimilate into its Peninsula organization or keep at Pleasanton. Nor have PeopleSoft's management team and employees endeared themselves to Ellison and Phillips by frequently posting signs on their office buildings and even on downtown business windows urging the public to join them in fighting the Oracle's takeover bid.

Even so, there's hope that in the aftermath of the bloodletting, Oracle executives will come to their senses and recognize the gold keys they have just been given. PeopleSoft and JD Edwards in Denver, which PeopleSoft acquired last year, have skilled engineers and customer-savvy sales and marketing representatives that can help grow Oracle's flagging applications division, which saw a 36 percent decline in the last quarter alone. The merger gives Oracle more scale and momentum if this business PeopleSoft has long cultivated can be allowed to grow against fierce competition without disruption by wholesale layoffs or an exodus of PeopleSoft talent to these competitors. Oracle's goal is clearly to coax these customers into the Oracle fold, and the sales and marketing teams from PeopleSoft could make that effort successful. Add to those people assets PeopleSoft's 70,000-square-foot, state-of-the-art data center and it's clear that Oracle can further enhance its profits by holding on to the Pleasanton operation.

As for the city of Pleasanton, we'd be na•ve to say that a layoff of any magnitude affecting PeopleSoft's 3,500 employees who work here, including 816 who live in Pleasanton, won't matter. True, the city government will continue to collect annual property taxes on PeopleSoft's seven buildings no matter who owns them. But a large layoff could have a serious impact on the hundreds of retail shops, restaurant and service businesses that dependent on PeopleSoft employees. Downtown merchants and restaurateurs, many who know PeopleSoft workers by name, say they've already seen a downturn by those concerned for their jobs. Layoffs would also affect the rest of the area, including cities on the other side of the Altamont where many PeopleSoft employees now live, BART ridership, and communities along I-680 up to Walnut Creek, where Duffield founded the company in 1987 and where many long-term employees still live. A good sign is that historically Oracle has wanted to expand to the Tri-Valley. It backed out of purchasing 40 acres n Dublin four years ago when the economy soured. Now it has the 55-acre PeopleSoft campus it just acquired, a ready-made site for those business expansion plans Ellison is eyeing.

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