Gartner Sees No White Knight for PeopleSoft - TheStreet

Gartner Sees No White Knight for PeopleSoft

The consultancy says none of the other major enterprise-software firms are logical candidates to buy the company.
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A leading information-technology consultancy has bad news for

PeopleSoft

(PSFT)

shareholders and customers hoping a white knight will rescue them from the clutches of

Oracle's

(ORCL) - Get Report

Larry Ellison.

Analysts at Stamford, Conn.-based Gartner said Friday that none of the other major enterprise-software companies are logical candidates to buy either PeopleSoft or

J.D.Edwards

(JDEC)

, the object of a friendly takeover by PeopleSoft.

"We believe PeopleSoft and J.D. Edwards ... users should consider a white-knight scenario as a low probability when considering their options," said Betsy Burton, vice president and research director for Gartner. Burton added, however, that her analysis doesn't imply that PeopleSoft necessarily needs the help of a white knight.

Burton examined various scenarios for vendors such as Microsoft, IBM and Hewlett-Packard to make a counteroffer for PeopleSoft, and concluded that none would be a good fit.

Burton's report did contain a bit of good news for PeopleSoft and J.D. Edwards. Gartner is no longer advising potential customers to sit on their wallets until the smoke clears.

"While uncertainty lingers, Gartner has been advising clients to not simply stop all PeopleSoft and J.D. Edwards deployment activities," Burton wrote. "Assess your risk tolerance, coupled with your assessment of the likelihood that Oracle will complete the PeopleSoft acquisition. Once understood, if appropriate, take specific action based on where you are in the application life cycle."

Gartner analysts also said that even if Oracle were to acquire both PeopleSoft and J.D. Edwards, it doesn't appear that these acquisitions will result in a change of market leadership. In 2002, SAP accounted for 19.6% of worldwide enterprise application software new license revenue, while the combined total of Oracle plus the two smaller companies is just 11%.

The share total reflects several types of software -- customer relationship management, supply chain management and enterprise resource planning -- and is of more than academic interest. Both acquisitions are currently being reviewed by the Department of Justice, which must decide if a larger Oracle would unfairly dominate the enterprise-software market.

The Justice Department must decide by

Monday if it wants to delay the $1.75 billion J.D. Edwards acquisition by asking for more information. It has already made that request to Oracle, which is seeking to execute a hostile takeover of PeopleSoft for $6.3 billion, or $19.50 a share.