As many as 10,000 people could lose their jobs as the result of Oracle's surprise US$7.4 billion acquisition of Silicon Valley icon Sun Microsystems, a financial analyst predicted Monday.
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 we had planned for the acquisitions of BEA, PeopleSoft and Siebel combined," Oracle President Safra Catz, said in a statement Monday.
[ For full coverage of the Oracle-Sun deal, see InfoWorld's special report. | Discover what's new in business applications with InfoWorld's Technology: Applications newsletter. ]
That profitability will come via layoffs, according to Tony Sacconaghi, a well-respected technology analyst with Sanford C. Bernstein & Co. He 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 $1.5B in op. 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 released soon after the deal was announced. 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."
Jobs may also be shuffled about from country to country as Oracle reshapes Sun's support and services group to match its global model, the TBR report said.
Sun, which has struggled for the better part of the last decade, following the dot com implosion, is already in the process of slashing between 15 percent to 18 percent of its workforce, or as many as 6,000 employees.
Get the independent advice and expertise you need to support a virtual workforce.
The increase in Linux popularity has increased the frequency and sophistication of malware attacks. Read this 2 page white paper now to learn how you can protect your Linux environment with real-time protection that is certified by all major Linux vendors.
Download now »
Ensuring acceptable application delivery will become even more difficult over the next few years. As a result, IT organizations need to ensure that the approach that they take to resolving the current application delivery challenges can scale to support the emerging challenges. This handbook elaborates on the key tasks associated with planning, optimization, management and control and provides decision criteria to help IT organizations choose appropriate solutions.
Download now »
A common misconception is that mid-range storage requirements are dramatically different than that of a larger enterprise. Mid-range storage users may require less capacity, but they have similar functionality and management requirements. This ESG paper examines mid-range storage needs and reviews a new solution that adjusts size while retaining value, performance and functionality.
Download now »
Sign up to receive Applications Resource Alerts
10 Recommendations
