PeopleSoft extend controversial refund program

By Stuart Finlayson

After a longer than expected period of deliberation, PeopleSoft has announced that it is to extend its controversial customer refund program until the end of the year.

The decision, which was confirmed in a filing with the Securities and Exchange Commission (SEC), severely dents the hopes of a successful takeover of the company by rival Oracle, which has tabled a bid of US$7.3 billion.

But with the customer refund program in place, should Oracle's takeover bid prove successful, which now seems unlikely, it would be forced to cough up at least another US$800 million to cover the cost of the program.

Oracle have complained bitterly about what they see as a blatant case of corporate entrenchment on the part of the PeopleSoft Board, as the money back guarantee was not introduced until after Oracle made its initial bid for PeopleSoft back in June.

Presumably wishing to minimise the threat of a takeover by Oracle, PeopleSoft also recently revised the terms of its rebate program, allowing its customers to receive refunds on purchases if PeopleSoft were acquired in the next two years, rather than one year as was previously the case, and also if the buyer reduced support for PeopleSoft products inside four years, rather than two. Additionally, it promised rebates of up to five times the purchase price of the software.

Oracle is set to continue to oppose the use by PeopleSoft of its customer guarantee program through the courts.

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