Oracle Could Slash 10,000 Sun Jobs Says Wall Street Analyst

The acquisition of Sun Microsystems by Oracle could spark a massive drive to cut down on costs by slashing thousands job posts worldwide according to a Wall Street Oracle Analyst.

Toni Sacconaghi, senior analyst with Sanford C. Bernstein & Co, wrote in a research note that Oracle will need to boost its profits by $700 million to deliver a $1.5 billion operating profit, which could mean "incremental headcount reductions" of at least 5,500, which could well reach 10,000.

Oracle wants to increase the contribution by Sun Microsystems to the company's non-GAAP operating profit by the second year to over $2 billion, making it more profitable in per share contribution in the first year than the acquisitions of BEA, PeopleSoft and Siebel combined.

Previous acquisitions also saw significant reductions in employees number. 7000 lost their jobs at Siebel and Peoplesoft when Oracle took over. Sun's current workforce tally is currently around 33,500 which means that roughly a third of the total numbers could be sacked.

Late last year, the company pink-slipped as many as 6000 employees. As predicted yesterday, Oracle could well sell the hardware arm of Sun Microsystems or spin it off, thereby reducing the employee number without actually causing grief.

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Our Comments

Oracle is ruthless in the way it deals with job cuts. The good news for Sun employees though is that since Oracle and Sun Microsystems do not actually have much overlapping, the job cuts will have to come from simply slashing jobs. Selling its networks and storage department for example would bring in hundreds of millions. Ditto for the SPARC range of processor and microelectronics.

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