Sun to cut 3,000 jobs as Oracle awaits approval for deal

IDG News Service - Sun Microsystems will lay off up to 3,000 workers over the next 12 months as Oracle awaits approval from European regulators for its acquisition of the company.

Sun is losing US$100 million a month while it awaits approval for the deal, Oracle CEO Larry Ellison said last month, so news of the layoffs came as no great surprise.

In a filing with U.S. regulators Tuesday, Sun said it was making the cuts "in light of the delay in closing the acquisition." It said the move will "better align the company’s resources with its strategic business objectives."

Sun will take a charge of $75 million to $125 million for the job cuts, mostly for cash severance payments, it said. It expects to incur most of the charges in the second and third quarters of its fiscal year, which means the current calendar quarter and the first three months next year.

Job cuts were a likely consequence of the deal in any case. Tony Sacconaghi, a technology analyst with Sanford C. Bernstein & Co., has said Oracle may cut up to 10,000 jobs once the deal is complete.

Sun already announced plans last November to axe between 5,000 and 6,000 jobs to improve its financial position. The cuts announced Tuesday, which amount to about 10 percent of Sun's workforce, are in addition to the earlier reductions, a Sun spokeswoman said.

The U.S. Department of Justice approved Oracle's $7.4 billion acquisition of Sun in August, but the European Commission has launched an investigation that could last until January. The regulators say they are concerned about the effect that Oracle's ownership of Sun's MySQL database will have on the open-source software market.