Director Says PeopleSoft CEO Misled Analysts

Times Staff Writer

Former PeopleSoft Inc. Chief Executive Craig Conway was fired in part because he intentionally misled analysts about the negative effects that a hostile takeover bid from Oracle Corp. was having on the software maker’s customers, a PeopleSoft director said Monday.

Steven Goldby, who has been on PeopleSoft’s board since 2000, said that Conway’s untruthful statements at an analysts conference last year were “one link in a chain of events” that led to his surprise ouster last week.

“We knew that Mr. Conway had misspoken and what he had said was untrue,” Goldby said Monday. His remarks came on the first day of testimony in Delaware Chancery Court where Oracle is seeking to nullify Pleasanton, Calif.-based PeopleSoft’s “poison pill” provision to thwart unwelcome suitors.


Redwood City, Calif.-based Oracle, the leading maker of database software, first bid for PeopleSoft in June 2003; its offer currently is valued at about $7.7 billion.

Also on Monday, PeopleSoft said that Goldby, chief executive of Santa Clara, Calif., materials developer Symyx Technologies Inc., testified that he and PeopleSoft’s four other independent directors discovered only last month that Conway intentionally misled analysts during a Sept. 4, 2003, conference when he said that Oracle’s bid was not scaring away customers.

Conway later admitted in a deposition given in the poison-pill case that he knew the statement wasn’t true, but said it anyway because he was “promoting, promoting, promoting.”

Conway, who was sacked late Thursday, did not return calls seeking comment. The former protege of Oracle Chairman Larry Ellison vociferously opposed a PeopleSoft takeover. He is scheduled to testify Wednesday.

Until the board saw Conway’s deposition several weeks ago, executives had believed he “unintentionally misspoke,” said PeopleSoft spokesman Steve Swasey. Realizing that the remarks were not true, PeopleSoft omitted them from a “corrected” transcript of the conference filed with the Securities and Exchange Commission, Swasey said.

PeopleSoft declined to say whether Conway had violated any laws by lying to industry analysts.


Conway’s false statements weren’t the only reason for his firing, Goldby testified.

The board, he said, felt Conway’s statement in June 2003 -- that PeopleSoft was not interested in a buyout “at any price” -- was inappropriate.

Board members also felt uncomfortable with how Conway personalized the fight with Oracle. Conway once compared Ellison to Mongolian warrior Genghis Khan. He also cited issues with Conway’s management that preceded the Oracle takeover bid. Those included the departure of senior-level executives who had clashed with Conway.

Goldby said he and his fellow independent directors continue to oppose the bid by Oracle, which trails PeopleSoft in the market for software used by companies and government agencies to manage financial reporting and human resources data. In the trial that began Monday, Oracle is seeking to invalidate a portion of PeopleSoft’s defense that could afford PeopleSoft customers $2 billion in refunds in the event of a new owner.

Separately on Monday, PeopleSoft said it would post earnings of 3 cents to 4 cents a share in the third quarter ended Sept. 30, compared with a 2-cents-a-share loss a year earlier. Revenue would be $680 million to $695 million, higher than analysts’ estimates of $654 million, according to Thomson First Call.

Even so, several Wall Street firms downgraded PeopleSoft’s stock, including First Albany Capital and Schwab Soundview Capital Markets. Mark Murphy, analyst at First Albany, said the downgrade to a “neutral” rating reflected “fundamentals that are still weak” and license revenue that is down 7% from last year.

PeopleSoft’s shares fell 63 cents Monday to $22.20 on Nasdaq after a 15% jump on Friday. Oracle’s shares fell 3 cents to $11.87.


Some analysts said PeopleSoft’s preliminary peek at its third-quarter results was a strategy to force Oracle to raise its bid from $21 a share.

“It’s posturing,” said David Hilal, analyst at Friedman, Billings, Ramsey, an investment firm that does not do business with or own shares of PeopleSoft. “They see the writing on the wall. And they know they’ve got to negotiate the best deal possible.”

Associated Press and Dow Jones Newswires were used to compile this report.