Dirty Larry

Round two to Oracle Corporation. Months after earning a bloody nose in its
attempts to take over business applications market rival PeopleSoft, Larry
Ellison's company managed a smart comeback. Oracle's never-say-die attitude
to this planned merger (hostile takeover, if you please) with Peoplesoft was,
when it first surfaced late last year, met with derision from the anti-trust
brigade and the rest of the "free world". When the court judgment
subsequently fobbed off Oracle's takeover ambitions, the righteous indignation
of the regulationists seemed to have won the day.

Oracle's gambit this time around was to achieve a coup: it showed in court
that Microsoft and SAP had contemplated merging, and drowned the logic of the US
government's case. In fact, a combined Microsoft-SAP entity would have made an
Oracle-Peoplesoft combo minuscule in comparison. The Justice Department's
contention that an Oracle-Peoplesoft combination could turn out to be a market
monopolizing titan in enterprise applications suddenly looked foolish, even more
illogical than its efforts to break up Microsoft.

But the battle is by no means over. Oracle's comeback, though, highlighted
the fact that the complexity of the technology industry, its subtle dynamics,
its immense competitiveness and mood for consolidation have been grossly
underrated by US (and EU) regulators. Judge Vaughn Walker's ruling could pave
the way for future mergers and acquisitions being less tortuous.

Meanwhile, Craig Conway (Peoplesoft's CEO) is not smiling just because his
former employer hijacked a losing case in style. For, he and the anti-trust
litigation lobby in the US and EU have a bigger truth on their hands to digest-the
market is now more fluid, dynamic and anticipative of a "Darwinian
consolidation" which they had not imagined. Just look at Oracle's
shopping list, which includes niche players like Siebel Systems, Lawson Software
and BEA Systems.

The Justice Department can now appeal, as Peoplesoft is hopeful it will;
Oracle will continue wooing Peoplesoft's clients, and Conway will have more
anti-takeover manoeuvers to pilot. As Peoplesoft pointed out in its SEC filing,
anti-trust concerns are just one of many issues involved, like for instance,
Peoplesoft's lawsuit alleging Oracle engaged in unfair business practices.
This hostile takeover case could be a slog, with some insights on the way and no
end in sight.

Ravi Menon in Bangalore