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Oracle's day in court

In a federal trial that started in June, the Justice Department set out to derail Oracle's hostile bid for PeopleSoft. Four weeks of testimony gave way to the judge's deliberations, with the verdict handing a major victory to Oracle.

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Larry Ellison, CEO, Oracle

Last hurrah for PeopleSoft?
After Oracle's court victory, customers will look for reassurance at what could be PeopleSoft's last annual user conference.
September 20, 2004

PeopleSoft sweetens severance packages
In a move to retain employees, the software maker quadruples the size of the minimum severance package for employees.
September 19, 2004

Oracle ruling highlights complexity of market
news analysis Business-software maker's antitrust victory may pave way for accelerated merger activity in overcrowded IT markets, experts say.
September 13, 2004

PeopleSoft aims to keep worker morale high
Six days before the Oracle ruling, PeopleSoft sped up the vesting terms for its workers' 2004 merit-based stock options, according to an SEC filing.
September 13, 2004


trial coverage

Oracle case bounces to Europe
The European Commission is studying the U.S. court decision favoring Oracle's PeopleSoft buyout and deciding whether to pursue its own objections.
September 10, 2004

Judge rules in favor of Oracle
Software maker prevails in courtroom against Justice Department's antitrust arguments. CEO Larry Ellison immediately extends stock offer, saying in letter to PeopleSoft, "we are hopeful a transaction can occur."
September 9, 2004

Ruling turns up heat on PeopleSoft
Takeover battle to continue as Oracle faces other obstacles in merger quest, experts say. Several scenarios are possible, but quick or tidy outcome is not expected.
September 9, 2004

Read the ruling
PDF In 164 pages, Judge Vaughn Walker delivers his decision, saying the "plaintiffs have not proved that a post-merger Oracle would have sufficient market share in the product and geographic markets."
September 9, 2004

PeopleSoft flap may hurt Oracle's image
Public opinion of the database giant sinks to a 12-year low, a new report indicates.
September 8, 2004

Traders bet on Oracle
Options on PeopleSoft stock are in demand, showing that Wall Street expects Oracle to win its antitrust case.
August 16, 2004

Judge moves to unseal documents in Oracle case
Says certain documents, which Oracle and others want to keep from eyes of rivals, may be necessary to decide case.
August 13, 2004

Judge grills Oracle, DOJ in closing arguments
Case summations open with Justice Department attorneys on the hot seat. Then Oracle faces the same tough treatment.
July 20, 2004

DOJ, Oracle write up opposing views
A week before closing arguments, the foes submit paperwork putting their own spins on antitrust debate.
July 13, 2004

Judge's order may be good for Oracle
Request to clarify antitrust arguments may signal weakness in Justice Dept.'s case.
July 12, 2004

Oracle, DOJ file antitrust legal briefs
Documents rehash four weeks of courtroom testimony; More enticing briefs expected on Monday.
July 9, 2004

Ellison's defining moment
perspective CNET News.com's Karen Southwick says a bravura court performance by Oracle's CEO may have pushed the company over the goal line in its bid to buy PeopleSoft.
July 2, 2004

No clear winner in antitrust trial
Barely hidden agendas, dense economic analysis and emotional customer testimony make case tough to call.
July 1, 2004

Oracle rests case as trial winds down
An economist says the merger would aid competition. Papers show IBM looking nervous.
July 1, 2004

Ellison: 'Radical' industry shift drove bid
Oracle's CEO testifies that competitive pressure compelled the company to attempt a hostile acquisition of PeopleSoft.
June 30, 2004

Microsoft details SAP buyout plan
Microsoft described star-crossed "Project Constellation" as its only shot at the high-end market for business software.
June 29, 2004

PeopleSoft CEO won't testify
Oracle decides to forego planned six-hour grilling of Craig Conway, but opens final week with testimony from Lawson Software CEO.
June 28, 2004

PeopleSoft, Oracle talked merger in detail
Oracle president says PeopleSoft proposed and discussed merging before the hostile takeover attempt was launched.
June 25, 2004

Oracle-PeopleSoft rivalry fueled innovation
The Justice Department presents Oracle e-mails, saying they show responsiveness to pressure from the rival it wants to acquire.
June 25, 2004

Microsoft executive cites expansion worries
Even a software giant can't be a big presence in every market, it seems. Oracle, meanwhile, looks at the little guys.
June 25, 2004

Market matters spurred Microsoft-SAP talks
Microsoft worried that if Oracle acquired PeopleSoft, it could lose ground in the database software market.
June 23, 2004

Oracle moves to blunt Microsoft testimony
White paper showing frequent competition meant to counter Wednesday's Justice Department witness.
June 22, 2004

PeopleSoft CEO blasts Ellison's 'jealousy'
Craig Conway says his company will beat leader SAP but stays mostly mum on Oracle's ongoing takeover attempt.
June 22, 2004

Oracle's lengthy shopping list
Court documents offer a rare glimpse into how Oracle assessed nine companies for possible acquisition.
June 22, 2004

For Oracle, a range of acquisition targets
CEO Larry Ellison says software makers Siebel and BEA are on the company's wish list.
June 21, 2004

Oracle president backpedals on 'oligopoly'
Justice Department plays up market observations Charles Phillips made in a previous incarnation as an analyst.
June 18, 2004

Economist: Oracle-SAP duopoly would hurt market
Antitrust expert supports Justice Department argument that Oracle's proposed purchase of PeopleSoft would be anticompetitive.
June 18, 2004

Documents show PeopleSoft feared Microsoft
Oracle's attorneys aim to prove that PeopleSoft feared more rivals than itself and SAP.
June 17, 2004

Testimony: SAP, Microsoft would keep Oracle in check
An Accenture executive testifies that credible competition would still exist after an Oracle-PeopleSoft merger.
June 16, 2004

Automaker cites customer costs of PeopleSoft takeover
Buyers of business applications worry that Oracle wouldn't support PeopleSoft users, forcing them into costly upgrades.
June 15, 2004

Govt. witnesses decry lack of choices
The Justice Department elaborates on its contention that an Oracle-PeopleSoft merger would crush competitiveness.
June 14, 2004

Oracle judge won't bar disputed witnesses
Neither Oracle nor Justice Dept. manage to keep other's witnesses off the stand.
June 11, 2004

Judge vows 'tougher line' on testimony
As the trial labors toward a definition of the enterprise software market, judge Walker tells both sides to get realistic about business information they deem confidential.
June 10, 2004

Trying a 'landmark case'
perspective Oracle's legal team might be outrunning the Justice Department, but CNET News.com's Karen Southwick says the race is a marathon, not a sprint.
June 10, 2004

DOJ: Big three rule corporate market
Testimony from IBM and PeopleSoft customer Verizon supports the Justice Department case that there's not enough competition to allow Oracle's acquisition plan.
June 9, 2004

Offer holds risks for early takers
PeopleSoft investors who accepted Oracle's tender offer of $26 a share--then didn't notice the offer drop to $21, or the recent rise in the stock's value--could lose money in the unlikely event Oracle opts to buy their shares now.
June 9, 2004

Oracle sees plenty of competitors
Oracle points to a PeopleSoft competitive analysis that shows there's more competition in the business application software market than PeopleSoft or the Justice Department have claimed.
June 8, 2004

Oracle hits hard at Justice Dept.'s case
A feisty Oracle comes out swinging at the government's insistence that its proposed acquisition of PeopleSoft would be detrimental to the business software market.
June 7, 2004

Microsoft, SAP mulled merger
The companies initiated merger discussions late last year, but eventually broke off talks for reasons of complexity, according to information released during discovery in the Oracle case.
June 7, 2004

previous coverage

Trade group favors Oracle in DOJ suit
A leading software trade association takes Oracle's side on the eve of its federal court battle, warning that the government missed important trends in its market assessment.
June 4, 2004

Takeover attempt takes its toll
A year after it began, Oracle's bid has left both companies the worse for the wear, analysts say. And the end may not be in sight.
June 3, 2004

Start marking your trial score card
The judge's line of questioning will be a key indicator of his thinking on whether to favor the federal challenge to Oracle's effort.
June 3, 2004

Attorneys sketch schedule for Oracle trial
Among the experts and executives expected to testify are Harvard business professor Marco Iansiti and PeopleSoft chief Craig Conway.
June 3, 2004

Oracle, Justice submit final witness lists
Top executives from IBM and Siebel are among additions to Oracle's list. Meanwhile, some lawyers who have gone before Judge Vaughn Walker, who will hear the case, say he relies heavily on testimony from experts.
May 18, 2004

EC regulators delay Oracle decision
European officials stop the clock on deciding whether to block the hostile bid. Observers speculate that the database giant is stalling to avoid a ruling that could harm its U.S. case.
April 15, 2004

Oracle outlines case for antitrust fight
Company co-President Charles Phillips argues that "to compete, we'll need the economies of scale" that a PeopleSoft buyout would bring.
March 1, 2004

U.S. to block Oracle's bid
Antitrust authorities say they'll go to court to block Oracle's proposed purchase of rival software company PeopleSoft, but Oracle vows to challenge the decision.
February 26, 2004

Oracle makes 'final' bid for PeopleSoft
The business software maker increases its hostile offer for rival PeopleSoft to $26 per share, raising the overall value of the acquisition purse to $9.4 billion.
February 4, 2004

PeopleSoft extends money-back guarantee
The company will continue a controversial money-back guarantee program through March 31, or until Oracle drops its $7.3 billion bid.
January 13, 2004

Oracle vs. PeopleSoft
A complete roundup of coverage of the first six months of the saga of Oracle's attempt to acquire PeopleSoft.
November 17, 2003

Oracle - DOJ FAQ

Will the government appeal the ruling?
For now, the U.S. Justice Department says it is reviewing its options. It has 60 days from U.S. Judge Vaughn Walker's Sept. 9 ruling to file an appeal.

The decision against the Justice Department could make future enforcement of antitrust law in high-tech markets tougher. An appeal is probable because there are few antitrust precedents in the software industry, and some of the economic theories introduced in the case have rarely been challenged in court. All this makes proper application of the law in this case subject to debate, antitrust attorneys said.

When is an appellate court likely to issue a decision?
A ruling from the appellate court would probably take three to six months--but could take longer, experts say.

Is the Oracle-PeopleSoft merger now certain?
Not exactly. PeopleSoft's board may say Oracle's $21-per-share offer undervalues the company. Even if Oracle sweetens the offer, PeopleSoft could reject it.

If the deal continues as a hostile takeover, Oracle's next obstacle is PeopleSoft's "poison pill." The company is suing PeopleSoft in an effort to revoke the anti-takeover provision. That trial is scheduled for Sept. 27. If it loses that case, Oracle could launch a proxy battle for control of PeopleSoft's board at the company's annual shareholder meeting next spring.

What about the European Union? Isn't it still reviewing the deal?
Yes. European regulators put their review of the merger on hold, pending a decision from U.S. courts. Although Europe issued a preliminary set of objections to the deal earlier this year, few see regulators there ruling against the deal. For one thing, the Europeans usually agree with American regulators on antitrust cases. In addition, SAP, Oracle's top competitor, has greater market share in Europe than in the United States, making antitrust charges against Oracle harder to stick.

Where does PeopleSoft stand?
PeopleSoft said it will "review the implications" of the ruling and noted that it had rejected Oracle's previous offers. PeopleSoft is suing Oracle, alleging that Oracle designed the attempt solely to damage PeopleSoft's business. PeopleSoft CEO Craig Conway, a former Oracle executive, has been outspoken in denouncing the Oracle bid. Under his leadership, PeopleSoft created a customer refund program soon after the Oracle bid was launched. The program puts any company that acquires the firm on the hook for nearly $2 billion in payouts to its customers.

Why did Oracle and the Department of Justice go to court?
The Justice Department filed suit against Oracle in February, charging that Oracle's proposed acquisition of PeopleSoft--an offer now at $7.7 billion--would reduce competition and result in price hikes for the software that big companies use to organize their accounting, sales and human resources activities.

Oracle decided to challenge the suit, the first time a high-technology company has fought a government decision to block a merger since SunGard Data Systems, a disaster recovery company, defeated a Justice Department injunction blocking its $825 million acquisition of Comdisco's disaster recovery assets in 2001.

Why does the U.S. government oppose Oracle's takeover plan?
The Justice Department said the purchase of PeopleSoft would leave very large companies with just two suppliers of key business software--Oracle and Germany's SAP. Because other companies don't compete at the level of the current big three, the two players remaining after the merger would form an illegal duopoly, the agency argued.

Why does Oracle want to acquire PeopleSoft?
Oracle CEO Larry Ellison testified at the trial that acquiring PeopleSoft is a matter of survival in an increasingly competitive market. Oracle launched its bid for PeopleSoft last year, just after PeopleSoft announced its intention to merge with rival J.D. Edwards. The J.D. Edwards deal helped PeopleSoft leapfrog Oracle for the No. 2 spot in the business applications market, behind SAP. Oracle's takeover bid also followed a period of relative stagnation of its core database software business and flagging effort to narrow the market share gap with SAP in the applications market.

When and where was the trial?
The trial began June 7 and lasted about six weeks, ending on July 20 after closing arguments. The nonjury trial was heard by Judge Vaughn Walker of the 9th Circuit U.S. District Court in San Francisco.

What happened at the trial?
The Justice Department relied heavily on the testimony of corporate software buyers, including Verizon Communications, PepsiCo, DaimlerChrysler, the state of North Dakota and New York's Erie County. Many of the customer witnesses frowned on the proposed merger, saying it would leave them with too few choices.

The trial also led to the revelation that Microsoft had held preliminary merger talks with SAP. Oracle offered the talks--abandoned well before the trial began--as proof that Microsoft intends to become a direct competitor in the business applications market. Other highlights included testimony from Oracle CEO Larry Ellison and President Safra Catz.

In which market do Oracle and PeopleSoft compete?
It's a $22 billion software market consisting of companies that sell programs designed to automate corporate functions, such as billing customers, updating employee records and processing orders.

Who are the other players?
SAP, Oracle and PeopleSoft are the largest suppliers of such software, but the market is also populated by hundreds of smaller, more specialized companies. In his ruling, Walker said the Justice Department did not prove that the business software of "numerous other vendors," including Lawson Software, American Mangement Systems and Microsoft, does not compete with the similar products of the three biggest players. Also, Microsoft entered the market a couple of years ago with the acquisitions of Great Plains Software and Denmark's Navision.

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