POST OF THE DAY
Oracle Corporation
Smart Move

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By zoningfool
November 2, 2004

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In my humble opinion, this latest twist in the plot (i.e., the $24 final offer and the November 19, 2004 deadline), is a smart move by Oracle's senior management. This hostile takeover drama has been overhanging the stock for some time.

During the shareholders meeting on Friday, October 29, 2004, a woman stood up and asked a question of the management. Although she got the acquisition target wrong (she referenced Microsoft--at which point, LE lightened things up by remarking their strategy was to buy every company ending in the word "soft"), she pointed out that the takeover ordeal was causing the stock price to remain stagnant. I believe she is correct. No one on the panel could refute the theory. The best answer offered as to what would "make the stock go up" was that the market rewards earnings and performance, especially when they beat expectations.

Well, Oracle has been hitting on all the correct metrics and beating EPS estimates, yet the price doesn't adequately reflect this situation and hasn't for well over a year. The obvious reason behind the share performance vis-�-vis the company performance is that the uncertainty surrounding the PeopleSoft offer is weighing us down--uncertainty as to the final bid price, uncertainty as to when the deal will become accretive, given that bid price, uncertainty as to the timeframe for the resolution to all this. Well, Larry et al., by this latest move, has removed a great deal of that uncertainty.

The final offer is $24 a share. The deadline is November 19, 2004. Even if there is no deal by then, at least we can move on, look at other target companies friendlier to a takeover and let PeopleSoft fend for itself amidst the competition, and let PeopleSoft's share price stand on its own in the market, without an Oracle bid to provide a floor. If the deal doesn't go through, in my humble opinion, PeopleSoft shareholders will have the most to lose. I believe the price will drop--maybe significantly. They will lose the chance to be aligned with a strong company and management that can take their product offerings and revenues associated with them and return greater value to the shareholders than they are currently receiving.

I believe, if the offer isn't accepted, Oracle will redirect its formidable resources at doing whatever it can to take business from them. I believe it's time for PeopleSoft management to either fish or cut bait. Either deal with Oracle in good faith for the benefit of their shareholders, or suffer the consequences of spurning a powerful suitor. PeopleSoft and its shareholders, the ball's in your court. Hope you join us in beating the competition instead of being the competition. The choice is yours.

Just my 2 cents,
zf


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