WSJ.com - Oracle's PeopleSoft Defense Could Make Waves

WSJ.com - Oracle's PeopleSoft Defense Could Make Waves "Oracle Corp.'s high-stakes legal strategy to defend its proposed $7.7 billion hostile acquisition of PeopleSoft Inc. has laid the groundwork for the broader roll-up of the business-software industry planned by Chief Executive Larry Ellison.
In a four-week trial in San Francisco, Oracle cast itself as an underdog in a global battle with Microsoft Corp., International Business Machines Corp. and SAP AG to provide integrated software systems to business and government customers. In so doing, Oracle sought to transcend concerns of the Justice Department over the impact a takeover of PeopleSoft would have on competition in a narrower niche of the software market.
Legal observers say Oracle could hand government antitrust lawyers a rare courtroom defeat. After testimony ended last week, proposed findings in the case are to be submitted this week, and U.S. District Court Judge Vaughn Walker will hear closing arguments July 20; a ruling is expected by summer's end.
Oracle still faces a possible antitrust challenge from the European Commission in Brussels. But a favorable ruling in the U.S. case would increase pressure on PeopleSoft executives to enter into takeover talks with Oracle.
An Oracle victory also could clear the way for additional acquisitions by Oracle and accelerate the consolidation of the $170 billion-a-year business-software industry. Indeed, the trial revealed that in the days after Oracle launched its bid for PeopleSoft in June 2003, IBM, Microsoft and SAP each considered big investments or mergers.
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Evidence is ample that business software is ripe for a shakeout. A recent study by the consulting firm Bain & Co. found that nearly two-thirds of about 500 publicly traded software companies lose money. But nearly all software companies with revenue above $1 billion are profitable, the study found."