PeopleSoft Exec Disputes List of Rivals

A PeopleSoft Inc. executive who testified in an antitrust trial that the company’s only serious competition comes from Oracle Corp. and Germany’s SAP was confronted Thursday with a raft of documents from his own colleagues suggesting otherwise.

PeopleSoft sales staff identified Lawson Software Inc. as a competitor for 69 customers who met at least part of the description being used in the trial to define the market at issue, according to evidence submitted during the three-hour cross-examination of PeopleSoft Executive Vice President Phil Wilmington.

Payroll specialist Automatic Data Processing Inc., or ADP, was identified in the internal records as competing for 38 deals, according to documents submitted in the U.S. Justice Department’s federal lawsuit here to block Oracle’s $7.7-billion hostile bid for PeopleSoft.

Antitrust regulators oppose the deal because they believe the merger would leave only two companies capable of providing complex human resources or financial software to run many businesses with more than $1 billion in annual revenue. Oracle contends that the market is far more competitive than the government and PeopleSoft maintain.

Perhaps the most damaging evidence entered Thursday involved the much-disputed intentions of Microsoft Corp. Wilmington repeated the view he gave Wednesday that the world’s biggest software company competes only for small and mid-sized business-software customers.

But it’s not just Microsoft’s current activities that are relevant under antitrust law. In order to show that an acquisition of PeopleSoft would not unduly reduce competition, Oracle only has to demonstrate that Microsoft is likely to compete for big customers in the near future.

Although Wilmington testified that he wasn’t worried about that prospect, his fellow executives clearly were.

After Microsoft announced in 2000 that it would acquire mid-market rival Great Plains Software, the head of PeopleSoft’s financial software division sent an e-mail to her colleagues.

“Yikes ... This should have all of us ... shaking in our boots,” wrote Renee Lorton. “I don’t buy the claims that they are only targeting the mid-market space.”

Then she referred to Microsoft Chairman Bill Gates personally: “As we all know, if he can’t own the market, he doesn’t bother.”

The former head of PeopleSoft’s human resources software group, Doug Merritt, shared similar concerns about his product a year later in an internal company publication.

“The biggest long-term threat is Microsoft,” Merritt said.

Under questioning by Oracle attorney Gregory Lindstrom, Wilmington said he disagreed with those conclusions.

“I don’t see them as a player in the ‘up market,’ ” Wilmington testified.

As for Lawson and ADP, Wilmington said PeopleSoft rarely competes with them in the final stages of deal-making. They may have been listed in internal documents only because they appeared to be contenders earlier on, he said.

Lindstrom also ran through a list of big wins for Lawson, including the Federal Reserve system, Northrop Grumman Corp.’s technology consulting arm and Safeway Inc. But Wilmington described those and other customers as exceptions or cases in which Lawson and similar competitors had small parts of a big business.

The leader of Microsoft’s business software division, Doug Burgum, is scheduled to take the stand Wednesday.

In the meantime, a Microsoft spokesman declined to rule out any ambitions in that market.

“Microsoft’s focus has been, and continues to be, on the small and mid-sized market,” said Jim Desler.

“I’m not going to answer any ‘Is it possible in the future?’ type of questions.”