You'd think that after the disaster Jean-Marie Messier created at Vivendi (NYSE:V) by overhyping the prospects of an aging French water utility, no executive would ever again resort to lying about his company's prospects.

Yeah, you'd think, but we don't live in fantasyland. So I guess you can color me unsurprised that the reason Craig Conway was fired as CEO of business software maker PeopleSoft (NASDAQ:PSFT) was because... wait for it... he was less than honest in describing PeopleSoft's sales prospects. Oops.

The dirty laundry was aired yesterday at the opening of the trial in Oracle's (NASDAQ:ORCL) suit to remove anti-takeover provisions that would allow it to move forward with a $7.7 billion hostile acquisition of PeopleSoft. Director Steven Goldby took the stand and described how Conway misled analysts in September 2003 when he said that Oracle's bid was having no impact on sales. Goldby also said that the board took action shortly afterward, amending his comments in a transcript filed with the Securities and Exchange Commission.

But Conway didn't get into hot water until recently, when in a deposition relating to the trial he gave his reasons for stretching the truth. A report at quotes Conway saying in the deposition that he was "promoting, promoting, promoting." And that he decided to brush off the impact Oracle's bid was having on sales because he was "hoping for a self-fulfilling prophecy."

Are you kidding me? News flash, folks: Denial isn't a strategy and is best reserved for the dark sitcoms making the rounds on HBO. It's as if Conway was planning a guest spot on Curb Your Enthusiasm rather than running a $2 billion a year software firm. No wonder the board fired him.

Of course, amid the comedy is an important lesson for investors: Run away from any firm that gets so caught up in promoting itself that it takes its eye off business fundamentals. That's probably what happened with PeopleSoft under Conway. New CEO Dave Duffield is unlikely to let that happen again, but it's probably too late for it to matter.

Indeed, in follow-up testimony this morning Goldby admitted that PeopleSoft's board would be willing to talk about a deal if the price were right and the acquisition could be closed quickly. Does anyone doubt the database king will agree to those terms? I don't.

It's time to get ready for OracleSoft.

Need to get current on the Oracle-PeopleSoft love-hate affair? Try these Foolish tidbits:

  • When Conway was sacked last week, I argued that OracleSoft was inevitable.

  • But a white knight like IBM (NYSE:IBM) could step in and rescue PeopleSoft. Microsoft (NASDAQ:MSFT), however, has already said it wants no part of a deal.

  • Oracle has been on the up, but its recent results make a PeopleSoft acquisition more inviting.

  • Fortunately, a federal judge decided that Oracle could go ahead with its bid.

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Fool contributor Tim Beyers owns shares of Oracle. You can view his Fool profile here.