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A federal judge is expected as early as today to hear much-anticipated testimony from a senior Microsoft Corp. executive about the technology giant’s plans — or lack thereof — to compete in the enterprise software market. What Microsoft Senior Vice President Douglas Burgum has to say could play a key role in whether the Department of Justice succeeds in blocking Oracle Corp.’s $7.7 billion hostile bid to acquire PeopleSoft Inc. The executive, who heads the Redmond, Wash.-based company’s business solutions group, is expected to say in response to government questions that Microsoft plans to focus on selling enterprise software to small- to medium-sized companies rather than to large corporations that buy from PeopleSoft, Oracle and SAP AG, the other major contender in the sector. Burgum is expected to come under withering cross-examination from Oracle’s lawyers, who are expected to press the executive on how far upmarket Microsoft really wants to go. Any admission that Microsoft anticipates selling software to large, complex enterprises could erode the key government contention that only SAP, PeopleSoft and Oracle are viable choices for this type of product. “Microsoft is going to try very hard to deny any design on large enterprises,” Oracle lead lawyer Daniel Wall told reporters during a break in Monday’s proceedings. “They will be doing everything they can.” Last week, both sides in the trial attempted to play to their favor the revelation that Microsoft and SAP held merger talks last year. Those discussions collapsed several months ago, and Microsoft said it has no intention of resuming them. SAP would likely cost Microsoft at least $60 billion. In testimony Monday morning, Scott Wesson, chief information officer of Apartment Investment and Management Co., told the court that his company decided to abandon Lawson Software Inc. as a provider of its human resources software in favor of PeopleSoft. While the government characterized this move as one driven by Lawson’s inferior software, Wall, a partner at Latham & Watkins, argued that the change was driven by PeopleSoft offering Aimco a 70 percent price discount and a rebate worth as much as 10 times the license price should the software provider be acquired. Aimco signed its agreement with PeopleSoft last June, the same month that Oracle unveiled its hostile tender offer for the Pleasanton, Calif.-based company. “It was an impulse purchase,” Wall said during the break. Also testifying was Richard Cichanowicz, vice president of business systems integration for Nextel Communications Inc. Nextel in 2002 decided to buy PeopleSoft human resources, financial management and supply-chain management software. Before that, it used a combination of Oracle, PeopleSoft and Ariba Inc. products to serve these three functions. Cichanowicz said that the company expects to become 30 percent more efficient by employing one brand of software across its organization. “If you don’t have an integrated solution, you are going to lose operational efficiency,” he said. Like many government witnesses who took the stand last week, the executive said that although SAP was a less favored alternative, knowing there were at least three viable alternatives gave Nextel more leverage in getting a better price. “If we did not get the deal we wanted, we could walk away,” Cichanowicz said. He also expressed doubt that Oracle would provide strong support for PeopleSoft customers should it acquire the smaller provider. “We do not believe that they would continue to upgrade the software in the manner PeopleSoft had been upgrading the software,” he said. Oracle lawyer Gregory Lindstrom attempted to undercut Cichanowicz’s testimony by saying there was a quid pro quo for Nextel to chose PeopleSoft. Lindstrom, a Latham & Watkins partner, produced an internal PeopleSoft e-mail suggesting that Nextel would choose PeopleSoft software over Oracle’s if PeopleSoft agreed to sign a deal under which its employees would use Nextel wireless phones. Cichanowicz said he was unaware of this. A PeopleSoft spokesman said that there was no quid pro quo in the company’s dealings with Nextel. “PeopleSoft does not barter,” he said. Copyright �2004 TDD, LLC. All rights reserved.

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