Tuesday, September 21, 2004

Short PeopleSoft?

It looks like PeopleSoft executives are creating a golden parachute for when Oracle finally buys the company. As an Oracle shareholder, this isn't good news, but it's rotten news for PeopleSoft investors. As this takeover attempt drags on, the odds are Oracle will lower its offer price to reflect increased costs, such as these, and PeopleSoft's decreasing earnings.

Which is all to say, I wonder if shorting PeopleSoft (currently at $19.34) would make any sense? Most of the risk seems to be limited, since the price is currently capped at $21. If Oracle lowered the total offer by $2.2 billion, that would put it in the $15 range. If Oracle failed to buy PeopleSoft, I would imagine the price would fall even further. Management hasn't exactly been acting in the best interest of the owners.

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