PeopleSoft replaces ousted CEO with founder

PeopleSoft’s board has fired president and CEO Craig Conway, leading some analysts to speculate that Oracle may enjoy a smoother ride in its takeover bid.

Conway, who had occupied the position since 1999, has been replaced by PeopleSoft’s founder and chairman Dave Duffield. The only reason PeopleSoft

would provide for the Conway’s ouster was that the board had lost confidence in his leadership ability.

“”There’s no smoking gun, there are no accounting irregularities . . . it’s a matter of the board losing confidence in Craig,”” said board member Skip Battle on an Oct. 1 conference call. “”And when that happens, one has to make a decision.””

The recommendation to terminate Conway was made by PeopleSoft’s transaction committee — the five-person group at PeopleSoft responsible for handling the situation with Oracle’s takeover bid. The board of directors was then put to a vote and Conway’s removal was unanimous, said Battle.

“”I’m here for the long term,”” said Duffield, dismissing questions that the position was just for the interim. “”I’m totally energized. I can’t imagine a better team of people to work with in light of the great performance the company has put forth.””

Duffield, who founded PeopleSoft in 1987, wouldn’t comment on the reasoning behind the decision to remove Conway, but said, “”We need a little more in the way of vision and strategy, and I think I’m pretty good at that stuff.””

PeopleSoft also said it has appointed Kevin Parker and Phil Wilmington as co-presidents and Aneel Bhusri as vice-chairman of the board. Kevin Parker, also the company’s CFO, announced that PeopleSoft’s licensing revenues are expected to exceed $150 million for the quarter which ended Sept. 30.

The fact PeopleSoft opted to terminate Conway after a quarter that should beat all analyst expectations “”just seems to be inconsistent with their actions,”” said Jonathan Rudy, software analyst with Standard and Poor’s equity research in New York City.

It’s likely, he said, Conway’s defiant posture with Oracle played a role.

“”The whole situation had become a personal, acrimonious battle between Craig Conway and Larry Ellison,”” said Rudy. “”It was very unlikely that the deal would go forward with Conway still at PeopleSoft.””

Mike Dominy, an analyst with Boston-based Yankee Group said, “”All signs are pointing towards making a deal between Oracle and PeopleSoft happen. . . . It would be extremely challenging at best to make a deal happen between the two companies with Craig Conway leading PeopleSoft.””

Paul Hammerman, an analyst with Cambridge, Mass.-based Forrester Research, said Conway may have ruffled feathers over more than the Oracle situation. Among the problems, he said, were rising maintenance prices, customer service issues and a “”proliferation of add-on products that many customers felt should have been delivered under the upgrade path.

“”I think (Conway) accomplished a lot of good things and put in place good operational discipline and restored the company’s profitability, but in the end, customers felt alienated,”” he said, adding that Dave Duffield may continue to defend against the Oracle bid.

Oracle’s most recent bid of US$21 a share is set to expire on Oct. 22.

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