WILMINGTON, Del. — Oracle Corp.'s hostile $7.7 billion bid for rival software maker PeopleSoft Inc. could drop by one-third to one-fourth, Oracle co-president Safra Catz said Monday.
Catz cited PeopleSoft's 2004 performance as the chief reason for what she said is likely to be a decline from the current $21-a-share offering price.
"The direction is down significantly," she said in response to questions from her own lawyers in a Delaware courtroom. Catz's testimony came at the start of the second week of trial of Oracle's legal challenge to PeopleSoft's anti-takeover defenses, as the 16-month long acquisition attempt continues.
A lawyer for PeopleSoft suggested Catz's statements and those from other Oracle executives were part of a continuing effort to use the trial as a platform to drive the deal price down.
Oracle chief executive Lawrence Ellison took advantage of his turn on the stand last week to warn PeopleSoft shareholders that the offer on the table was likely to be replaced with a lower number.
Under cross-examination by PeopleSoft's attorney, Catz admitted that, prior to the trial, Oracle had made no public statements about the dimensions of a drop in the offering price.
However, in a recent press release, Oracle said it was taking into account specific liabilities that PeopleSoft was adding in evaluating the deal, Catz said.
Catz said new financial models are being run. The last models, done in January, expected PeopleSoft to earn about 85 cents a share in 2004.
At that time, the offering price was $26 per share. No new models were done when Oracle dropped its offer to $21 per share in May, according to Catz.
So far, she said, her sense is that PeopleSoft's 2004 earnings will be "60, 59, 61" cents a share. PeopleSoft seems to be doing "quite poorly" in 2004, she said, and is no longer issuing guidance to let analysts know what earnings are projected.