Oracle in a buying mood, its president says

As Oracle Corp. pushes forward with its hostile bid to acquire rival enterprise software maker PeopleSoft Inc. for US$7.7 billion, it is also sizing up further acquisition options, according to Oracle president, Charles Phillips.

Though the Redwood Shores, Calif., software company is constantly in a process of reviewing its options for buying other companies, Phillips told reporters at its OpenWorld conference in London on Monday that the combination of a consolidating market and an economic recovery in the market over the last year has made future acquisition deals in the near term more likely.

“For us today, it makes more sense,” Phillips said. “A lot of companies have come to us asking to be bought, and a lot of companies have seen the writing on the wall. Our choices (for acquisition) are growing and we’re sifting through them as we speak.”

Phillips would not give any time lines or name any companies in possible contention for acquisition, other than the customer relationship management (CRM) software company Siebel Systems Inc., which Oracle CEO Larry Ellison said in a videotaped deposition for its antitrust trial against the U.S. Department of Justice in June was second on Oracle’s wish list of companies to buy.

Phillips said the list is wide and diverse. “We won’t limit our choices to applications or service companies,” he said.

The Oracle executive also indicated that the company will once again offer an extension to its current Sept. 10. deadline for its PeopleSoft offer. “I wouldn’t read too much into the Sept. 10 deadline since we’ve extended it so many times,” Phillips said. “Extending the tender offer is now fairly standard.”

Oracle extended the bid deadline last month, marking the tenth time the company had done so since launching the takeover campaign in June 2003. Oracle is also fighting the continuing U.S. government lawsuit to stop Oracle’s PeopleSoft takeover bid.

“There are certainly easier ways to buy a company and our preference is always to be friendly, unless of course a company is failing in its fiduciary responsibility and we have to show them the light,” Phillips said.

Though Oracle currently has only about 6 percent of PeopleSoft’s total outstanding shares tendered, Phillips said that the shareholders “want something to happen.”

Oracle’s president said he had heard the theories that its battle to acquire PeopleSoft may have driven away potential customers scared off by the resulting uncertainty created in the market, but that it was difficult to measure the impact of the bid. “Our market share is growing in all of our sectors, but you could then say, maybe we would have gained even more market share (if it weren’t for the PeopleSoft bid) — who knows?” Phillips said.

Echoing what analysts have been saying for some time, Phillips conceded that the enterprise applications market is just about saturated, and with the market consolidating down to a few big players such as Oracle and SAP AG, opportunities for growth have become limited. “Market share is basically measured in revenue: you can get additional revenue from existing customers or from migrating customers,” Phillips said.

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