Insight interview - Wake up Call.

(From Financial Director)

Byline: Tom Berry.

"We announced the JD Edwards acquisition on the morning of Monday, 2 June, this year. I had spent weeks and weeks on due diligence, working nights and weekends. I clearly remember being with my wife for dinner for the first time in a month on the Thursday night after the announcement. I spent the whole evening explaining how sorry I was for all the work I was doing and promised it would slow down from that point. At 4:30 the next morning, when the Oracle bid came in, the phones started ringing."

Kevin Parker, CFO of PeopleSoft, hasn't had it easy recently. The announcement of its $2bn acquisition of mid-market software vendor JD Edwards made the combined company the second-largest financial software vendor in terms of market share in the world. Oracle, whose number-two position PeopleSoft had usurped, struck back with a $16 per share hostile bid for PeopleSoft, later upping its offer to $19.50 per share, valuing the company at over $6bn.

"When the top five or so software companies in the world account for 125% of total industry profit, you understand the need to make it into the top rank," Parker says. "An increase in market share tends to generate more market share as you gain exposure. It is self-perpetuating.

"Oracle was trying to use the capital markets to achieve a goal its products could not. They were losing market share, and its licensing revenues from applications fell by 30% in the last couple of years."

PeopleSoft hasn't been immune to the downturn, either. Its revenues fell by 20% from 2001 to 2002. But the company has turned itself around in the last few years. Whereas it was once a tenth the size of market leader SAP, it is now only a quarter the size of the German giant. Parker's goal is to close the gap further by integrating PeopleSoft and JD Edwards successfully, and to shore up its defences against further attacks from hostile bidders.