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PeopleSoft's Layoff Plans

September 04, 2003
By Cynthia L. Webb, WashingtonPost.com Staff Writer
Filter column, Must-Read Technology News and Views

Fresh from its completed $1.8 billion acquisition of J.D. Edwards & Co., business software maker PeopleSoft will likely lay off between 800 and 1,300 workers, The Wall Street Journal reported today. The newspaper makes no bones about the irony of the cuts: PeopleSoft chief Craig Conway "has complained loudly that Larry Ellison will slash jobs if Oracle Corp. succeeds in its hostile, $7.3 billion bid for PeopleSoft. But Mr. Conway is about to wield his own ax, with surprising force." The newspaper noted that "[d]uring a visit to J.D. Edwards's Denver campus during July, Mr. Conway seemed to dispute analysts' suggestions that up to 1,000 employees of the combined companies would lose their jobs as a result of the merger. PeopleSoft's board, in urging rejection of Oracle's bid, warned that employees wouldn't stay with the company if their future was in doubt. In speeches, Mr. Conway has said 'respect for employees' is a core value the two companies share."

But job cuts are coming after all, according to PeopleSoft CFO Kevin Parker. He said the combined PeopleSoft-J.D. Edwards head count will shrink to a target of 11,700 workers next year. Current figures peg the combined employer roster at between 12,500 and 13,000 workers.

PeopleSoft also is expected today to give analysts more insight on how it plans to integrate its operations with J.D. Edwards. PeopleSoft "faces enormous pressure to make its friendly $1.8 billion merger with J.D. Edwards work -- and to do so quickly. Analysts gathered in New York today will be looking for clear explanations of how PeopleSoft plans to reach the $150 million to $200 million in annual cost savings it has promised and to grow revenues at the same time," The San Jose Mercury News reported. According to the San Francisco Chronicle, "[m]erger experts say that whether the merger ultimately benefits shareholders of the new company or leaves them worse off than before rests heavily on the quality of the plan presented today, and its execution." Management consultant Ken Gaebler told the Chronicle: "The idea behind mergers like this one is that two plus two can add up to five. But it's very common in such mergers for the total to end up being some number less than four."

The Mercury News noted that the implementation of the plan to be unveiled today "could be critical in determining the outcome of the PeopleSoft-Oracle battle that began in June. A fast and smooth integration could boost PeopleSoft's stock price and make the company too expensive for Oracle's taste."

PeopleSoft and Oracle are slated to appear at a court hearing tied to Oracle's hostile takeover bid today, The Associated Press said. "PeopleSoft has already tried to use the Alameda County Superior Court lawsuit to stymie" the bid. "On Aug. 26, PeopleSoft distributed a new version of the 2-month-old lawsuit that featured e-mail snapshots of Oracle executives and employees discussing their desire to hurt PeopleSoft and influence industry analysts," the wire service said.

© 2003 by Washingtonpost.Newsweek Interactive.

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