PeopleSoft Completes J.D. Edwards Acquisition

Another page in the software consolidation saga was written when Peoplesoft (PSFT) completed its acquisition of J.D. Edwards (JDEC) by purchasing 88% of all shares outstanding for $14.74 a share. PeopleSoft expects to acquire the remaining J.D. Edwards shares before the end of August. This will make the total cost for the acquisition about $1.8 billion in cash and shares.

The new company will have $2.8 billion in revenues, 11,000 customers and 13,000 employees - for the moment.

"The combination of PeopleSoft and J.D. Edwards creates the second largest enterprise applications software company in the world," said PeopleSoft president and CEO, Craig Conway. This makes Siebel Systems the world's third largest enterprise applications software company.

The news was greeted with a sigh of relief in some parts of Denver, J.D. Edwards' headquarters. According to documents filed with SEC, CEO Bob Dutkowsky will receive a total of $4.9 million in severance pay after staying with the new company for a six-month transition period.

Another 197 executives may receive as much as $53 million in severance. Of that total, 6 people will receive severance pay of three times their annual salary and any bonuses received in the last three years. Forty-three people are entitled to two times the sum of their salary and bonuses and the remaining 148 will receive their annual salary plus bonus.

Most of the remaining 4,750 J.D. Edwards employees will be victims of the $150 - $200 million in cost savings PeopleSoft estimates it can achieve by merging the two companies together.

J.D. Edwards' co-founder Ed McVaney and his family owned about 19.3 million JDE shares. These shares are now worth $285 million, or about $57 million more than before the acquisition was announced.

Despite Oracle's very public opposition to the merger, its hunt for PeopleSoft continues. "We believe time is on our side. Oracle remains committed to acquiring PeopleSoft -- even with the addition of J.D. Edwards," said an Oracle spokesman.

Ironically, Oracle's hostile take-over bid turned out to be a blessing in disguise for J.D. Edwards executives. The company's opposition to the PeopleSoft/J.D. Edwards merger raised the stakes, forcing PeopleSoft to sweeten its bid for JDE and accelerate its offering. This makes Larry Ellison, not Craig Conway, Bob Dutkowsky's new best friend.

Oracle Extends Its Offer for PeopleSoft

Leaving no turn unstoned in this merger drama, Oracle Corporation (Nasdaq: ORCL) has extended its previously announced tender offer for all the common stock of PeopleSoft, Inc. until midnight on August 15, 2003.

Oracle, which launched its hostile bid for PeopleSoft in early June, said last week that it had acquired 44 million shares -- or about 14% of the total number of shares.

The Redwood Shores company started out offering $5.1 billion for its Pleasanton-based competitor, boosting the offer to $6.3 billion in cash. Now that PeopleSoft has successfully completed its merger with J.D. Edwards, the figure has jumped to $7.3 billion.

Yet J.D. Edwards may prove to be a Trojan horse for PeopleSoft. To complete the merger, PeopleSoft had to issue 52.6 million additional shares to J.D. Edwards stockholders, who are likely to have no loyalty to the PeopleSoft. For those shareholders, the temptation to flip their shares and earn an additional $4.76 a share in cash (a 33% premium) may prove to be overwhelming. You can expect most of those 52.6 million shares to be tendered to Oracle. This makes Ed McVaney Larry Ellison's new best friend.

Bayer Yakuhin Deploys Siebel Pharma Enterprise-Wide

Bayer Yakuhin, a Japanese subsidiary of the heathcare giant Bayer Group(NYSE: BAY), is deploying Siebel Pharma to create a system to integrate sales, marketing, research and product development.

The project will expand Bayer Yakuhin's 5 year-old Siebel Sales deployment into an enterprise-wide solution that enables sales representatives to improve their effectiveness by leveraging client sales information from diverse sources. Siebel Pharma will allow the organization's medical sales representatives to target prospects. It will also provide them with the latest information on how Bayer Yakuhin's products will meet their patients' needs.

Bayer Yakuhin has begun the rollout of Siebel Pharma to 600 staff in ten locations, and plans to gradually expand the deployment to the rest of the organization.

"By implementing Siebel Pharma, we succeeded in establishing a single, complete source of physician information," said Tomomi Shozen, head of application of research and development, Bayer Yakuhin.

The company is also extending Siebel Pharma's capability by using wireless technology. In addition, it plans to deploy Siebel Pharma Analytics, an analytical tool tailored to the needs of sales management in the pharmaceutical industry.

In the future, many of Siebel System's new customers may come from Asia. According to the Aberdeen Group's "Worldwide CRM Spending Report," investment in CRM projects in Asia, like Bayer Yakuhin's, is expected to outperform similar projects in the rest of the world, reaching $2.32 billion in 2006.

Dr. Steve Garnett and Brett Queener Join Salesforce.com

Dr. Steve Garnett, the former vice president of alliances at Siebel Systems, will join Salesforce.com to run its business in Europe, the Middle East and Asia.

Prior to joining Siebel Systems, Steve held a variety of senior positions at Oracle Corporation, including vice president of marketing for Europe, vice president of Alliances for Europe and sales director at Oracle UK. He joined Siebel Systems in April 1997 as vice president and general manager in Europe, Middle East and Africa and was promoted to head World Wide Alliances, covering consulting, platform, software and industry partners. Garnett holds a PhD in theoretical physics (nuclear engineering) and received his undergraduate degree in mathematics.

Brett Queener, the former vice president of field marketing at Siebel Systems, has also joined Salesforce.com to run its field marketing organization.

Empirix Test Software Validated with Siebel 7

Both Empirix e-TEST suite 6.7 and OneSight 4.6 products have been validated with Siebel version 7. Empirix software simplifies the test process for Siebel 7 deployments by helping customers test and monitor application performance, scalability and reliability in their production environment.

The Empirix e-TEST suite has integrated test process management, functional testing and scalability testing to enable organizations to test the quality and scalability of deployments of applications. Empirix OneSight 4.6 is used to monitor the performance of deployed applications in a production environment.

The integration of Empirix e-TEST suite 6.7 with Siebel applications provides users with a comprehensive test platform that enables them to quickly create automated test scripts that verify the functionality of Siebel deployments. These same scripts can then be reused without modification for performance monitoring, using Empirix OneSight.

"Siebel Systems' validation of Empirix testing and performance management solutions is an important step for Empirix," said Larry Timm, vice president of Strategic Alliances at Empirix.

Empirix develops and distributes test and monitoring solutions that measure, manage and enhance the performance of Web and voice applications, contact centers and communications networks. The company has over 3,400 customers worldwide. Empirix was created in September 2000 with the merger of RSW Software and Hammer Technologies.

ThinkEquity Analyst Estimates 1,200 Jobs to be Cut at Siebel Systems

After only two days on the job, ThinkEquity analyst Yun Kim has predicted that the reorganization earlier this month will result in the loss of 1,200 jobs. Kim estimated that a 20% cut in Siebel Systems' staff will yield about a 15% operating margin, which is the target Ken Goldman named in Siebel's most recent pre-announcement conference call.

We don't agree with Kim's estimate. Siebel Systems has ways of improving operating margins other than laying people off. According to our math, if Siebel Systems' current margins are 9%, and the goal is 15%, the company should only need to layoff 6% of its workforce - or 300 people. Now double the number to be on the safe side and the cut amounts to 600 people, still less than half of Kim's estimate. We wonder why a profitable company, with more money in the bank than they know what do with, would lay off one in every four workers?