If the single most important thing to any business is its reputation, then Oracle Corporation is in deep trouble.
From a report published this week by market research firm Techtel:
In 2Q04, opinion of Oracle by US IT professionals reached the lowest level in twelve years. This declining opinion, even against a background of declining opinion of software companies in general, is undermining demand strength for Oracle against IBM, Microsoft and SAP and poses a severe challenge to the continued success of Oracle in the near future. […] Positive opinion of Oracle continues to decline significantly, as does trust in Oracle; Oracle’s corporate brand image is reducing the demand situation for individual Oracle products.
What’s behind this decline in reputation and trust? It’s not the products (Oracle has a well-respected and robust product line), so it’s something else. 99.9% probability – it’s all to do with Oracle’s attempted acquisition of PeopleSoft.
For the past year, Oracle has been embroiled in a hostile takeover battle to acquire enterprise software vendor PeopleSoft who is fiercely resisting Oracle’s overtures. As has been widely reported during much of this year, neither investors nor customers seem enchanted by Oracle’s position and actions.
Indeed, Oracle was engaged in a court case in June over the PeopleSoft deal which exposed business practices that may have further eroded investors’ and customers’ trust in the company. Among the revelations that emerged in the court case was the rampant favouritism practiced by Oracle (and, it must be said, also by its major competitors) resulting in huge discounts for certain customers only.
At the end of August, Oracle extended its $7.7 billion offer for PeopleSoft for the tenth time as it waits for a court decision in an antitrust lawsuit that aims to permanently block the proposed acquisition. Oracle’s offer is now scheduled to expire at midnight on 10 September – that’s tomorrow.
Last week, a US appeals court reinstated a class action lawsuit filed by angry shareholders against Oracle and top executives (including CEO Larry Ellison), citing suspicious insider stock sales, public boasting by executives and highly optimistic financial forecasts.
What a sorry state of affairs. Confidence in Oracle clearly has reached the basement. It really desn’t matter if that’s actually the fact or not – if investors and customers believe it to be, then it is so.