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Sources: 'Major' layoffs at Oracle, more to come

Number of people let go on Friday unclear, but one analyst said it could be in the thousands

By Eric Lai and Chris Kanaracus, IDG News Service
January 12, 2009 12:00 PM ET

Computerworld - Oracle Corp. made "major" cuts in its global workforce on Friday and more are expected to come, say multiple sources and news reports.

Sales staff and consultants working for Oracle in North America were hit hard, say sources, as well as employees who had joined Oracle recently through its acquisitions of Hyperion Solutions Corp. and BEA Systems Inc.

The number of people let go on Friday is unclear. Tim Klasell, an analyst at Thomas Weisel Partners LLC, told Computerworld that he thought the layoffs were likely to be in the hundreds or low thousands, rather than the 8,000-figure buzzing about on some blogs and message boards.

Oracle declined to comment. The company employs 84,000 people globally. An 8,000-employee layoff would amount to about 10% of its workforce.

Based on Oracle's history of acquisitions and layoffs, as well as money the company has already publicly said it plans to spend this year on severance, it will likely keep trimming through spring of 2009.

"I think they're doing this in waves," Klasell said. "It's not great for morale, but you want to make sure you don't cut into the meat."

One Oracle salesperson in the U.S. said they were called into a meeting Friday and told the news then. More cuts are likely to come, said the salesperson, who asked to remain anonymous.

"They're going to have to. They're not going to sell any [customer relationship management software] in these times," the worker said. "BEA was very bloated, and they've got to prune a lot of those people out."

According to a Dec. 22 filing to the SEC (see page 12), Oracle expects to eventually spend a total of $148 million on severance packages for laid-off employees of BEA, which it bought in January 2008.

While trying to fight off Oracle, BEA changed the terms of its severance in late 2007 so that most employees would receive between three months and 12 months of pay and COBRA health insurance if they were laid off within a year of an acquisition.

Oracle completed its $8.5 billion takeover of BEA on April 29 of last year.

Oracle has already spent $38 million on BEA severances, according to its Dec. 22nd filing, as it laid off 275 BEA employees in California, according to state records, and possibly more elsewhere.

Oracle has yet to file a notice with California's Employment Development Department regarding Friday's layoffs. Alerting the department with the Worker Adjustment and Retraining Notifications (WARN) is required by California state law.

However, Oracle has a history of sending WARNs only after layoffs occur. When Oracle announced in January 2005 it would lay off more than 5,000 employees from the recently acquired PeopleSoft Inc., the state only received WARNs for about 900 workers two weeks after the layoffs occurred.



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