Oracle Corp. chief executive Lawrence J. Ellison testified Wednesday that his company's $7.7 billion bid for rival business software maker PeopleSoft Inc. was radical but necessary.
"We thought the only way we could survive and prosper was through an acquisition strategy," Ellison said during the federal antitrust trial challenging the proposed deal. "Oracle had to consider a strategy we had never considered before. If we wanted to survive and grow, we [decided] we will have to start an acquisition strategy. PeopleSoft was on top of the list."
Ellison depicted an Oracle takeover of PeopleSoft as a savvy step in view of cutthroat competition that will force a wide range of tech companies to combine forces so they become more efficient and drive prices lower.
The Justice Department is trying to block Oracle's takeover attempt, alleging a PeopleSoft acquisition would drive up prices and stifle innovation.
The government contends that Oracle, PeopleSoft and Germany-based SAP AG are the only software makers capable of making the sophisticated products that automate financial and personnel management jobs at large U.S. companies.
Under cross-examination by Justice Department lawyer F. Claude Scott, Ellison repeatedly disputed the government's premise. "Every day the competition is getting worse," he said. "Every day there are competitors pushing our prices down."
Scott repeatedly challenged Ellison's motives for pursuing PeopleSoft, suggesting that the bid was a sinister attempt to create uncertainty about a major competitor. PeopleSoft has made similar allegations in a lawsuit scheduled to go to trial in November.
Ellison said Oracle is stalking PeopleSoft simply to gain the size and muscle that it needs to compete against a large field of competitors, most notably Microsoft Corp.
If Oracle fails in its PeopleSoft quest, Ellison said, it will be a major disappointment.
"We would have wasted a tremendous amount [of money] and energy," Ellison testified. "It would have been a very bad mistake because we should have been pursuing other acquisitions."
Responding to a question, Ellison acknowledged that Oracle is considering three or four other publicly held technology companies as takeover targets. He would not identify the acquisition candidates but said the list includes software makers specializing in business applications, business intelligence and technology infrastructure.
Three companies on an Oracle takeover list drawn up in April 2003 fit those descriptions: Siebel Systems Inc., Business Objects and BEA Systems Inc. The takeover list is part of the trial evidence.
Ellison testified near the end of a month-long trial. The case has riveted the high-tech industry since Oracle launched its hostile takeover attempt more than a year ago.
So many people wanted to see Oracle's leader testify that a long line stretched down a normally empty corridor. When the courtroom reopened after a 75-minute lunch break, all the seats were quickly filled.
During 2 hours and 20 minutes of testimony, Ellison avoided his penchant for outrageous remarks. He triggered laughter at one point when he began one of his signature spiels about high-tech's future and advised the courtroom reporter to "stop me if I run on."
While Oracle's attorneys have been sparring with Justice Department lawyers seeking to block the PeopleSoft bid, Ellison has been indulging in two of his favorite pastimes -- sailing and fattening his bank accounts.
He spent last week in Newport, R.I., where his yacht racing team cruised to victory over the defending America's Cup champion. During the past two weeks, Ellison also pocketed nearly $68 million by selling some of his Oracle stock. Ellison still owns nearly 1.3 billion Oracle shares worth about $15 billion.