With an emphasis on diapers, purees and pacifiers, TotSpot, Kidmondo, Lil’Grams and others offer parents one place to keep an online diary about their child, upload photographs and videos and post up-to-the-moment status updates. On TotSpot, just as on other social networking sites, parents and babies can even become friends with other parents and babies.

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Like a growing number of entrepreneurs, George Chen, a 50-year-old Bay Area native, is chasing his American dream in China.

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Just days after David Wang produced a mock newscast criticizing Taiwanese officials and uploaded the clip to Tudou, a popular video sharing site in China, it disappeared. What’s surprising is not that it was censored - but that it remained online as long as it did.

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SIDEBAR: China monitoring video Web sites more closely

For China’s well-connected youth, the Internet and cell phone have become critical communication tools. Largely under 25, this cohort of 107 million accounts for nearly half of China’s rapidly growing Internet population. They get their news from blogs and online bulletin boards. They depend on the Internet for entertainment, downloading and watching American television shows like “Prison Break” and “Ugly Betty.” Raised in the post-Cultural Revolution era, this generation has grown up as China began its economic boom, in a decidedly different environment than their parents.

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From social networking to video sharing, the Chinese are fashioning their own versions of Facebook, Twitter and other popular Web sites and tweaking them to suit the tastes of the country’s exploding population of Internet users, which already surpasses that of the United States.

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SIDEBAR: Why Chinese startups draw big U.S. bucks

Jinhua, China — For years, Qiutian Chen labored on assembly lines. He polished marble. He built car parts. And he saved his money.

Six years ago, this unassuming son of farmers took those savings and spent an initial $13,000 to start a factory in the rural town of Jinhua, hours away from the nearest big city, Hangzhou.

Chen made golf carts, which he sold to his only customer, a Shanghai exporter. He couldn’t afford to travel to trade shows to establish his company further.

“We didn’t have the money. We couldn’t go abroad,” the stocky 43-year-old entrepreneur said.

So Chen turned to the one computer the business owned and its dial-up connection to the Internet. Now Chen, who has a junior high school education, is on his way to becoming a millionaire.

Chen and his company, Repow, demonstrate the growing influence of Alibaba.com, the Chinese e-commerce company that on Tuesday will list shares on the Hong Kong stock exchange in the largest Internet initial public offering since Google.

Third in the series

“What is a reasonable time to wait?” The 5,000 employees laid off after the takeover move on and find new jobs.

This three-part series goes behind the scenes during the last days of one of the East Bay’s largest, most successful high-tech companies, one that held an unusual place in the hearts of many of its employees, customers and supporters. It is based on interviews with PeopleSoft insiders, filings with federal regulators and legal documents.

By Ellen Lee

Skanda Swamy hesitated as he reached the front of the security line at the San Jose International Airport.

About to take off his shoes and send his laptop bag through the X-ray machine, he looked back at his family and friends who had gathered to see him off on his cross-country journey to Atlanta.

His wife Poornima held close their 5-year-old son Shankarsai and 8-year-old daughter Tejasvi. Tears were rolling from his son’s eyes, even as he insisted he was not crying. “It is just water coming out of my eyes,” he told his mother.

Swamy thought about turning around. He would not be seeing his family for several months, as he started a new job in a new city. He would be on his own.

The 38-year-old software engineer had accepted the position a week earlier, after being one of 5,000 employees laid off in mid-January in the fallout of Oracle Corp.’s $10.7 billion takeover of PeopleSoft Inc.

Oracle, in an effort to make the merger profitable, had slashed duplicative jobs from both the Oracle and PeopleSoft sides: software developers, marketing staffers, sales representatives and administrative employees such as human resource officers and accountants. It kept about 90 percent of PeopleSoft’s software development staff, following Oracle CEO Larry Ellison’s pledge to keep PeopleSoft’s customers happy by supporting its products for 10 years.

According to information Oracle provided the state, the company eliminated about 650 positions from PeopleSoft’s Pleasanton headquarters and 625 from Oracle’s Redwood City campus.

For PeopleSoft employees, the news had arrived in a UPS package delivered to their homes over the weekend in mid-January.

“This letter will serve as formal notification of the termination of your employment effective January 15, 2005 due to the merger between Oracle and PeopleSoft,” it began.

The notice, after weeks of uncertainty, signaled the official end of the employees’ PeopleSoft career.

Twin packages arrived for husband and wife David Ogden and Sandy Biagi, who had both been part of PeopleSoft’s marketing team. Within a week, Biagi found a new job with Men’s Wearhouse; Ogden started a fund called the Safety Net, endowed by PeopleSoft founder Dave Duffield, to assist laid-off employees struggling to make ends meet.

Dana Leipold, another marketing employee whose job was cut, started a marketing and communications consulting business. Rick Bergquist, one of PeopleSoft’s earliest employees and its chief technology officer, weighed his options. In the meantime, he took his daughter to look at potential colleges on the East Coast.

Janna Thomas, director of PeopleSoft’s creative services team, scrambled to secure health insurance for her domestic partner, Katho Baer, who has multiple sclerosis. Though PeopleSoft had provided health care benefits for both of them, the severance package did not. They faced a pricey ordeal if Thomas did not find interim health insurance: Among other expenses, Baer was about to start a new, promising therapy that could cost $2,000 a month. They finally secured temporary health insurance through a special state program for about $600 a month.

The members of PeopleSoft’s board returned to their day jobs. Founder, Chairman and CEO Duffield moved back to Lake Tahoe, where he and his wife had been raising his six adopted children before emerging from semi-retirement to try to keep the company out of longtime rival Oracle’s hands. Aneel Bhusri went back to Silicon Valley venture capital firm Greylock, where he had taken a leave of absence at Duffied’s request. “It was an honor to go back with him,” he said. “He’s a very special human being.”

In Pleasanton, PeopleSoft employees who were kept on began their transformation into Oracle employees. Some struggled to adjust to the idea of laboring under Ellison, whom they had bitterly fought against for more than a year and a half. Others just worried that their jobs could still be on the line.

Swamy had been prepared to be let go. One of the newest software engineers and project managers to join his group, he had been employed by PeopleSoft for little more than two years.

Swamy had already started his job search two months earlier, using all the resources at his disposal. A pragmatic person, he had told himself that sooner or later an Oracle takeover would happen. “This is basically business,” he said.

Ideally, Swamy sought a job in the Bay Area. He and his wife had purchased a home in San Jose three years ago, chosen because of its location in a good school district. Tejasvi, a precocious third grader, had also told her parents that she didn’t want to leave her friends.

But Swamy, who before had also lived in St. Louis and Louisville, Ky., after immigrating to the United States from India, didn’t feel completely wedded to the Bay Area. He scoffed at others who refused to leave because of the region’s good weather. Finding a job, no matter where it was located, was more important.

He had seen his friends struggle to land a position during the dot-com bust. Even though he sensed the economy improving, he didn’t want to take any chances. He didn’t want to wait until his severance check ran out. And he certainly didn’t want to seem more and more unmarketable as the gap between jobs widened.

“What is a reasonable time to wait? One month? Two months?” he said. “At the end of three months, you run out of severance, and then what do you do?”

A week after he was laid off, one of his queries paid off. Rapidigm, a software consulting company, came calling. But Swamy, who before landing at PeopleSoft had been a software consultant and at one point had commuted back and forth between the Bay Area and Dallas, hesitated. The position meant a return to the unpredictable life of consulting. The project could last two months — or two years.

Most of all, it required moving to Atlanta.

Swamy stalled for time. He gave himself two weeks to find an alternative job in the Bay Area. But none of his prospects came through by his deadline. Though employers were hiring, they were taking their time making their decisions and looking for an exact fit for the skills they needed.

Facing the deadline, Swamy took the job. It was a good job, a full-time position, one that would help Swamy, the sole breadwinner, support his family. “I didn’t want to let go of something I had in my hand,” he said.

He and his wife then faced the dilemma of whether to move the family right away. They prepared their children for the possibility. They debated different scenarios, called on a college friend for advice, made a 1 -hour call to his wife’s parents in India.

In the end, they decided that Swamy would go first. Check out Atlanta. Check out the job. Find out more about how long he might be stationed there. Allow their children to finish the year at their current schools.

His wife helped him pack one large black suitcase. He purchased a one-way ticket to Atlanta. He couldn’t afford to fly back to the Bay Area every weekend, so he planned to return for his son’s sixth birthday at the end of April.

At the airport, Swamy kept his family close for as long as possible. He put his arm around his wife. He smiled wistfully as his children played, attaching tags to their wrists and pretending to be pieces of luggage.

“Be good and listen to your mother,” he told his children before he lined up at the security gate. To his wife, he asked her not to worry too much.

As he approached the front of the line, he looked behind him and saw his family crying. He considered turning around and comforting them one more time. But he kept his emotions in check. He couldn’t hear his wife, but saw her wave at him, urging him to keep going. He waved back. And then he started a new chapter in his life.

Second in the series

“This is a sad day.” PeopleSoft executives break the news to employees and prepare the company for the handover.

This three-part series goes behind the scenes during the last days of one of the East Bay’s largest, most successful high-tech companies, one that held an unusual place in the hearts of many of its employees, customers and supporters. It is based on interviews with PeopleSoft insiders, filings with federal regulators and legal documents.

By Ellen Lee

The executives gathered in the conference room, aptly named “The Good, the Bad and the Ugly,” had been there many times before.

They had met there the day Oracle Corp. had launched its surprise hostile takeover bid of PeopleSoft Inc. in June 2003. They had met there again the next morning and the morning after that as they weighed each tactic to fend off the company’s longtime rival. At the end of September, they had met there late at night, this time excited about the homecoming of PeopleSoft founder Dave Duffield as CEO.

Occasionally, the cast had changed, but the room, named, like the others on that floor, after a famous Western, remained the same: the central “war room” to discuss the latest maneuvers in the 18-month battle.

On this morning, they had convened there for a different reason: They had to deliver the news to PeopleSoft’s 12,225 employees that the company had been sold to Oracle for $10.7 billion.

PeopleSoft’s four top executives, Duffield, Aneel Bhusri,[SLS2] Kevin Parker and Phil Wilmington, had flown back the night before to the Bay Area for this purpose. A script had been prepared, laying out the details of the announcement and giving each a final role to play.

From inside The Good, the Bad and the Ugly, Duffield, the company’s founder, began the conference call. Co-president and chief financial officer Kevin Parker then discussed how Oracle planned to close the deal formally in the next few weeks. He reassured employees that Oracle had agreed to honor PeopleSoft’s severance packages, which included, at minimum, three months’ pay and health benefits.

Known to be collected and composed throughout the takeover fight, Parker gave a presentation that morning that did not flow smoothly. It seemed as though the magnitude of it all dawned on him as he discussed PeopleSoft’s accomplishments and what would happen next.

It was at this point that his voice broke. “I’m sorry,” he said. “I can’t do this.”

Duffield stepped in to try to finish Parker’s portion of the script, but couldn’t continue either. “This is catching,” he said before Wilmington, co-president and head of sales, took over. They abandoned the script, choosing instead to speak from their heart. Their voices quivering with emotion, they thanked employees for their hard work during the past 18 months and told them how sorry they were to see the company disappear.

For all of them, PeopleSoft had not been an ordinary company. In its 17 years, it had generated amazing loyalty among employees and customers. It had stood out from the rest of Silicon Valley for its legendary, sometimes quirky “PeoplePeople” corporate culture. Long before the dot-coms, it had promoted a “play hard, work hard” ethos: Pets joined their owners at the office; a company rock band played at corporate events; employees had even taken an all-expenses-paid trip to Lake Tahoe.

When the conference call ended half an hour later, there were few dry eyes among the executives or among the employees who had huddled together in conference rooms throughout the PeopleSoft empire. Chief technology officer Rick Bergquist, part of the team inside The Good, the Bad and the Ugly, later joked, “We were a bunch of girlie men that day.”

Duffield also sent an e-mail to employees that day. “This is a sad day,” he wrote. He applauded the work of PeopleSoft employees and apologized to those who would have to relocate for new jobs. “I make a final request and that is to continue our work with our heads held high,” he closed. It was his last message to employees.

The transition began quickly.

A team of Oracle executives arrived within days and held back-to-back meetings with each of PeopleSoft’s departments. The sessions filled company conference rooms, as PeopleSoft managers handed over binders full of documents, gave PowerPoint presentations and briefed Oracle on the status of their projects.

But employees also worried now as they waited for the ax to drop. Earlier that year, Oracle had estimated it planned to slash as many as 6,000 positions. Oracle CEO Larry Ellison had said he wanted to keep the best of the best of PeopleSoft’s staff, with an emphasis on engineering talent. But PeopleSoft employees didn’t know what that meant. The same questions ran through their minds: What’s going to happen next? What’s going to happen to my job?

Many PeopleSoft employees had already begun to make preparations. Soon after Oracle launched its hostile takeover bid, Dana Leipold, a marketing employee, had dropped her health insurance with PeopleSoft and signed up with her husband’s company. Two months before Oracle and PeopleSoft struck a deal, Skanda Swamy had started job hunting in earnest. He had cast a wide net, not limiting his search to the Bay Area.

Janna Thomas, the head of creative services, called her team together the afternoon after the executives’ conference call. Clearly their marketing projects had been placed on indefinite hold, so she suggested that they focus on helping each other prepare for the inevitable: finding a new job.

For the rest of December, PeopleSoft employees busied themselves with brushing up their resumes, scouring the Internet for job openings and networking among their peers. In the marketing department, they pulled out old projects and started putting together their portfolios, photographing their past work and designing personal Web sites to showcase it.

The exodus of PeopleSoft’s executives began around the holidays. Duffield packed his bags and made such a quiet exit that many employees did not realize he had left. Others sent one last e-mail to employees before bidding farewell.

Bergquist, one of PeopleSoft’s founding employees, stayed on until the last day, spending his time reassuring employees. Two days before Christmas, when most workers had left the office, he cleaned out his desk alone, reflecting on his time there. He had kept his badge from every conference PeopleSoft had held during its 17 years. Once, at one of its earliest events, the company had forgotten to ship most of the conference bags to Chicago, where the conference was being held. Bergquist and a few other employees who hadn’t yet left for the conference packed the bags into their luggage and into boxes and got them there the night before the convention started.

“The customers never knew it had happened,” recalled Bergquist, chuckling at the memory.

On Jan. 14, what employees called “D-Day,” the Friday before Oracle planned to notify employees of their status through a UPS package delivered to their home, the mood on the Pleasanton campus was a mix of joy and sadness.

By then, there was nothing to be done. Employees’ offices were bare. A few days before, Thomas, a Detroit Red Wings fan, had taken home her sports paraphernalia and the surfboard that had been propped up against the wall of her office. David Ogden had removed the photos showing his two children growing up during his 13 years at the company. Swamy picked up some PeopleSoft gear that was being given away: beaded necklaces that lit up for his 8-year-old daughter and 5-year-old son and pens, coffee mugs and a jacket, souvenirs of his time there.

About 11 that morning, Ogden, Leipold, Thomas and the rest of their creative services team went outside to take a group photo in front of the PeopleSoft sign. All in black, they clambered onto and in front of the sign. Leipold would later post the photo on eBay in an auction selling the team’s services. A buyer in Australia made the winning bid for $61, though she or he has yet to claim it.

Throughout the day, employees cried and hugged and cried some more. In the past month, they had shifted from one emotion to the next: sadness, denial, anger. Today, as they started packing nearby restaurants for one last meal together, they moved closer to acceptance.

Alone, Thomas left her office. Only a pile of paper clips and an anti-Oracle button from the days protesting the takeover were left on her desk. She didn’t know for sure, but she had a feeling the package arriving on her doorstep the next day would be a termination notice.

As she approached the elevator one last time, she looked back down the hallway and smiled. “God, this was a lot of fun,” she thought before she stepped through the doors.

First in the series

“This is going to happen.” Over the weekend, it becomes clear that PeopleSoft Inc. will be sold to Oracle Corp.

This three-part series goes behind the scenes during the last days of one of the East Bay’s largest, most successful high-tech companies, one that held an unusual place in the hearts of many of its employees, customers and supporters. It is based on interviews with PeopleSoft insiders, filings with federal regulators and legal documents.

By Ellen Lee

The sun already had set as the private plane started its flight home.

The four occupants inside - Dave Duffield, Aneel Bhusri, Kevin Parker and Phil Wilmington, PeopleSoft Inc.’s four top executives - were speeding back to the Bay Area.

They knew the inevitable was coming. It had become more and more apparent over the weekend. By the time they touched down in the Bay Area, PeopleSoft, the Pleasanton software company they had fought to keep independent, would be sold to rival Oracle Corp.

They were going home to deliver the news in person. The four executives had spent the weekend in Wilmington, Del., preparing for a trial in what would have been the latest skirmish in the 18-month battle. With the trial about to be canceled, they were no longer needed in Delaware. They were needed in Pleasanton.

It only seemed appropriate. All four bled PeopleSoft blood. Parker, co-president and chief financial officer, represented the company’s steady hand: analytical, unruffled and even-tempered throughout the year-and-a-half soap opera. The 6-foot, red-haired Wilmington, co-president and head of sales, had been the galvanizing force, energizing the sales team to close deals despite skittish customers.

Duffield, a 61-year-old grandfatherly figure, had founded PeopleSoft 17 years ago, nurturing it in his image. He called employees “PeoplePeople.” He knew them by name. He hugged them. Early on, he took them on a trip to Lake Tahoe, he and his wife paying for the expenses themselves. In the process, he turned PeopleSoft into one of the largest, most successful high-tech companies in the East Bay and one that was unusually beloved.

The semiretired Duffield had returned to the helm in October after the ousting of Craig Conway, the hard-charging CEO who, over time, had disappointed the company’s board. When he came back, Duffield turned to Bhusri - a young, energetic PeopleSoft alumnus and now the board’s vice chairman - and together they had drawn up a new technology strategy they believed could revitalize the company and keep it from Oracle’s clutches. Just that week, they had been promoting the plan to financial analysts.

But PeopleSoft’s fate was no longer in their control. Even as the four executives had prepared for the next round of the fight that weekend, even as they readied themselves in one hotel suite to testify in court, a team of their bankers and attorneys in the next hotel room had been negotiating the details of an agreement with Oracle.

By noon Sunday, as it became clear that the two sides were close to finalizing a deal, the four executives started making plans to return to the Bay Area. By 4 p.m., they had convinced their trial attorneys there was no point in staying in Delaware. Their plane would leave at 6. “This is going to happen,” they said with resignation.

Beginning of the end

In some ways, the beginning of the end had started four months before, in September, when the Department of Justice had lost an antitrust case against Oracle.

That case had been PeopleSoft’s “silver bullet” to stop Oracle’s relentless pursuit. Nothing could trump antitrust law: not Wall Street, not Oracle CEO Larry Ellison, not his wealth, influence or flamboyant, no-holds-barred personality.

But after a federal judge ruled in Oracle’s favor, the odds for PeopleSoft’s survival had fallen to next to nothing.

PeopleSoft still felt confident. Duffield’s return in October had re-energized workers. Under Duffield, employees had even formed a committee charged with the sole mission of finding ways to keep them happy.

If any company could eke out a victory, PeopleSoft could. It had to, its employees thought. It was the good guy.

Duffield and the members of his hand-picked team threw themselves into developing a new technology plan, one that could make PeopleSoft the undisputed leader in the industry. PeopleSoft also was on track to pull in record sales for the quarter.

It felt secure on the legal front. It doubted that the judge in the Delaware case would go so far as to force PeopleSoft to accept Oracle’s deal, as Oracle was calling for in its lawsuit. It also felt it had prepared a strong case against Oracle for an upcoming trial in Alameda County. Most of all, PeopleSoft believed it was worth much more than $24 per share, Oracle’s latest offer.

In an attempt to end the battle for good, PeopleSoft had started making plans for a showdown, a so-called “proxy fight,” when shareholders essentially would pick between PeopleSoft’s plans to stay independent and Oracle’s takeover bid. It had set a date, March 25. It had dispatched employees to hunt for a venue.

But time had run out. In November, PeopleSoft’s directors and executives hit the road to present its new technology strategy and show how it could make the company much more valuable than whatever Oracle could offer.

Not all the shareholders wanted to hear it. Many of them were short-term investors, and they did not want to wait to see if PeopleSoft could pull another trick from its hat. What if in the meantime another terrorist attacked, or a natural disaster hit, or some other awful event sent PeopleSoft’s stock plummeting? They did not want to take the gamble.

Even PeopleSoft’s most loyal long-term investors could not offer their full support. Though they agreed that $24 per share was not a high enough price, Oracle had only to sweeten its offer to sway them.

It became clear to the board that PeopleSoft could lose its proxy battle in March. It was a sobering realization.

The directors always had known in the back of their minds that PeopleSoft had to strike a deal if they received a fair offer and there were no regulatory hurdles. By law, they had to act in the best interest of shareholders. The shareholders came first, above PeopleSoft’s 11,225 employees, above its 12,500 customers. It could not continue to fight and thereby risk losing the proxy battle and be forced to sell at a lower price.

By late November the directors had agreed, reluctantly, that it could accept a deal at $26.50 a share. A shareholder had confided to them that this was as high as Oracle was willing to go.

The negotiations did not start right away. But in December, the Delaware judge forced PeopleSoft’s hand. Notified that PeopleSoft’s board had shown interest in making a deal at $26.50, the Delaware judge ordered that Oracle’s executives be notified.

By Friday of the same week, Skip Battle, a key member of the board of directors, asked a PeopleSoft attorney to approach Oracle with the $26.50 per-share price. The price was not negotiable. PeopleSoft, still distrustful, also sought the assurance that a deal could be completed by the end of the weekend. Oracle agreed. Then the attorneys and bankers rolled up their sleeves and started tackling the details of the sale.

Accepting the outcome

Duffield, on the road visiting customers that week, flew into Delaware alone Friday. Bhusri, Parker and Wilmington joined him Saturday afternoon.

It was a somber weekend. They prepared for trial in case negotiations fell through. But their hearts weren’t in it. By Sunday afternoon, they had packed their bags and knew they would not be taking the stand the next day. A plane was ready to whisk them back to the Bay Area.

Battle, who had cut his family vacation short and flown into Delaware on Sunday evening, met the others in the ornate lobby of the Hotel du Pont.

They conferred one last time. They had fought the good fight. They agreed they had to do what had to be done. They had to accept the inevitable.

Battle, who was the head of the board’s independent directors, chaired the final board meeting from a law office conference room in Delaware. Like many of their past meetings, they held it via teleconference with the directors, scattered throughout the country, dialing in. Duffield and Bhusri took part from the plane.

The attorneys reviewed the deal. The bankers made a presentation and offered their opinion. Battle then called a meeting of the committee of independent directors, then the full board.

The outcome was clear. It had started to crystallize in late November, had been set in motion Friday and had come to a head that weekend. The vote made it official. One by one, the directors signaled their approval of the deal. Duffield and Bhusri abstained.

The sky was dark as the plane headed toward the Bay Area. The four men knew their main priority now was to return to Pleasanton for the announcement of the news. They had to be back with their people. They had to explain that soon the company known as PeopleSoft, the company they had collectively fought so hard for, was about to come to an end.