| What's Going On at PeopleSoft? | KEVIN RESCHENBERG
10-04-2004 |
Friday morning, while waiting in the dentist's reception area, I was subjected
to the elevator music version of Prince's "Purple Rain". Surpassing even
that horror, though, was the surprise of the news from PeopleSoft—that
Craig Conway had been fired. With all that's going on, I feel a little
distracted from technical talk...
The opinion among investors seems to be that Conway was standing in the way
of the Oracle merger and the board became frustrated by this.
And so the stock price shot up—even past the current offer
price in anticipation of a higher offer.
But does that theory make sense? The board has unanimously rejected the
current offer and every other one, from $16 all the way up to $26. I doubt
that Conway forced the board to vote that way, or that the board would
suddenly make an about-face and blame Conway for holding it back.
Dave Duffield was named CEO. Whether he was dragged out of retirement or
he volunteered, who knows. Now, I'm a huge "DAD" fan. Even when things
got tough for the company starting around 1998,
many PeopleSoft employees gave him the credit he was due for founding the
company, writing the first code, and leading it through explosive growth.
The company hosted a conference call and denied that Conway's firing had anything
to do with the Oracle offer. DAD then talked about being in it for the long
term and mentioned the need to work more on making PeopleSoft a better place
to work (as it was in the old days). He reportedly referred to this three times.
So...If DAD's objective is to negotiate with Oracle and get the merger over with,
why get rid of Conway now? Was he that much of an impediment that not even the
entire board could act? If it's really about his performance, and the merger is almost
a done deal, why would the board care? Why would DAD say he was in it for the long term?
Why the sudden change of
opinion on the (unanimous) board, when earnings for the quarter are predicted
to be better than expected? Why would DAD talk about making employees happy
if his real plan is to sell to Oracle quickly? I just can't see
him acting like that.
Was the board really just thanking Conway for his service by giving him a
nice severance package? No, because apparently he had already been given a
big golden parachute that was to be triggered in the event of an Oracle takeover.
As I understand it, his severance now is less than that. The abrupt way in
which this happened, and the way his service was being described argue against
that theory.
The only speculation I've read that might make sense is that Conway was also
creating some type of static interfering with possible white knight offers.
One other opinion piece claimed that customers at Connect were expressing
dissatisfaction and that DAD may have decided to step in for that reason.
Again, if he does not think PeopleSoft has a future, why bother?
It makes me think that maybe this will go on for a while longer.
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