Oracle layoffs not just ex-BEA workers, indicate slowdown

Company cuts 500 sales, consulting jobs, report says

Oracle Corp.'s layoffs late last week, while apparently smaller than reports initially indicated, still show that the bellwether enterprise software company is feeling the effects of the pinch in corporate IT spending.

One longtime U.S.-based Oracle consultant, who was laid off last Friday despite a decade of experience, said he had received "excellent performance reviews." But his work, which consisted of helping companies install and run their Oracle and PeopleSoft software, had slowed so much that the consultant had been "benched" in the past two months. In Oracle parlance, that means he was not working on any client projects while still drawing a salary.

"The most bench time I'd ever gotten in the past was a month max," said the consultant, who agreed to an interview on the condition that he not be named. "So I saw the writing on the wall."

The Wall Street Journal, citing sources familiar with the matter, reported today that 500 Oracle employees in its North American sales and consulting divisions were laid off last Friday.

Oracle declined to comment.

While many of Oracle's layoffs are directly tied to acquisitions, such as its $8.5 billion takeover of BEA Systems Inc. last year, "there are other factors at work here, such as the lower volume of business under current economic conditions," said Frank Scavo, an IT analyst at Strativa Inc. whose blog has closely tracked the Oracle layoffs.

Most of Oracle's offerings are large enterprise application packages that require "major capital expenditures," he said, which is "more subject to recessionary pressure" than, for instance, software-as-a-service (SaaS) subscriptions.

This may be why Oracle consultants, like the one who spoke to Computerworld, were hit hard. He was given a three-month severance package, which he called "a pittance."

Rival enterprise software vendor SAP AG also conducted a round of layoffs last week, cutting about 100 jobs in the U.S. and Canada. The reductions were related to SAP's "continuing integration [of] Business Objects" and affected a range of positions, but they were not related to the economy, according to a spokesman.

Oracle's layoffs, as reported by by Computerworld on Monday, occurred worldwide.

In India, 40 employees in Bangalore were laid off, according to The Times of India. More than 60% of Oracle's 86,657 employees work outside of North America.

Oracle planned for layoffs long ago.

According to a Dec. 22 update to its "Fiscal 2008 Oracle Restructuring Plan" filed to the Securities and Exchange Commission, Oracle expects to spend nearly $39 million, mostly on employee severance, by the end of its fiscal year on May 30.

Oracle has set aside nearly four times that amount -- $148 million -- to pay severance to ex-BEA employees who are laid off, according to the same SEC filing.

Most ex-BEA employees were guaranteed three to 12 months of salary and COBRA health insurance if they are laid off by Oracle within a year of BEA's acquisition, which was finalized April 29, 2008.

One ex-BEA-turned-Oracle salesperson who was laid off on Friday was unhappy, calling Oracle "a pirate ship." "They've got all those billions in the bank," said the worker, who spoke on the condition of anonymity. "They're not going to spend it on employees, I assure you."

As of the end of November, Oracle had $7.4 billion in cash and equivalents. Net income, however, was down 1% year over year, to $1.3 billion.

With the tens of millions of dollars Oracle still has allocated in the near term for severance packages, analysts such as Scavo expect more layoffs in the offing.

"Oracle manages expenses and headcount very carefully, and they do it on a monthly basis," he said. "It's not going to go out of business. But that doesn't mean you're not going to lose your job."

Copyright © 2009 IDG Communications, Inc.

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