Oracle may layoff 10,000 jobs after Sun deal

Global IT giant Oracle's $7.4 billion acquisition of Sun Microsystems could terminate 10000 jobs, predicted a financial analyst, as per a report in IDG News Service.

Excluding charges related to the restructuring, Oracle expects the Sun deal to contribute $1.5 billion toward its earnings next year and $2 billion in the second year of the acquisition, making it more profitable in per-share contribution in the first year than the company had planned for the acquisitions of BEA, PeopleSoft and Siebel combined, according to Oracle President Safra Catz. Meanwhile, Tony Sacconaghi, a well-respected technology analyst with Sanford C. Bernstein & Co said, "That profitability will come via layoffs." Sacconaghi had been forecasting $800 million in operating profit for Sun's fiscal 2010, rather than the $1.5 billion predicted by Oracle.


"In order to deliver $1.5 billion in profit, Oracle would need to boost profits by $700 million assuming no material revenue erosion, which suggests incremental headcount reductions of 5,500 to 10,000 depending on timing," Sacconaghi wrote in a research note. But, Oracle declined to comment on any possible layoffs.

The acquisition was announced Monday, just two weeks after Sun's previous suitor, IBM, had walked away from the table after being unable to come to acquisition terms.

Analyst firm Technology Business Research (TBR) agreed that layoffs are coming, predicting that sales and marketing staff will be hit hardest. "Oracle will rapidly rationalize Sun's cost-base," the company said in a report on the deal. "This means general layoffs and a reshaping of cost centers such as services and support."

Sun is already in the process of slashing between 15 to 18 percent of its workforce, or as many as 6,000 employees.

Agencies