A Peoplesoft board member has testified that Craig Conway, fired on Friday as chief executive of the enterprise software group, was asked to step down partly because he misled investors about the impact on sales of Oracle's $7.7bn hostile bid for the company.
Steven Goldby told the Delaware Chancery Court that Mr Conway last year led investors to believe that the bid was not causing customers to back away from Peoplesoft products.
This statement, later clarified in a regulatory filing, contributed to the board's decison to ask for Mr Conway's resignation, he said.
Mr Goldby was speaking as a witness on the first day of what is expected to be a two week trial in a suit brought against the company by Oracle. The bidder is asking a judge to dismantle PeopleSoft's takeover defences, including special money-back deal for customers that could add $2bn to the cost of the proposed acquisition.
The removal of Mr Conway fuelled speculation that Peoplesoft's board could move to accept Oracle's offer.
However, Mr Goldby said PeopleSoft's independent directors continue to oppose the takeover attempt:
?There were then and there are now people who believe that Oracle did not intend to acquire PeopleSoft, that its objective was to damage the business.?
As the trial got under way, Peoplesoft raised revenue guidance for the third quarter.
The company now expects revenue in the three months to September of $680m-$695m, compared with Wall Street expectations of $654m. Licence revenue will be $155m-$165m.
Peoplesoft said it signed 34 contracts with licence revenue in excess of $1m, compared with 23 transactions in the second quarter. The average selling price for new customers was $454,000, up from $346,000.
?We thought that doing it [changing CEO] off a strong performance was the best way to do it,? Mr Goldby told the court.
Peoplesoft said third quarter pro forma earnings per share would be 13-14 cents, in line with expectations. The stock shed 50 cents to $22.33.
Siebel Systems, another enterprise software company, also said that third quarter revenues would be higher than expected amid signs that business customers are starting to become more willing to sign new licensing deals.
Siebel is now predicting revenue of $315m-$317m compared with consensus expectations of $306m. It added that licence revenues would be about $104m a 10 per cent increase from the second quarter and substantially higher than analysts' forecasts of $96m.
Enterprise software companies make money from software licences and maintenance and service contracts, but licence revenue is regarded as the best gauge of growth prospects.
Siebel said it remained comfortable with analysts' forecasts for the fourth quarter and would provide additional details when it announced full financial results on October 20. Siebel stock gained $1.22, or about 15 per cent, to $9.41 after the announcement.
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