Oracle analyst predicts 10,000 job cuts

 

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By Stuart Turton

Posted on 21 Apr 2009 at 10:32

A Wall Street analyst has suggested that Oracle's acquisition of Sun could result in the company axing 10,000 jobs.

"To deliver $1.5 billion in operating 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," says Toni Sacconaghi, senior analyst with Sanford C. Bernstein & Co in a research note.

Sacconaghi was also basing his prediction on Oracle's prior strategy following acquisitions. After Oracle's acquisition of PeopleSoft in 2005, 5,000 jobs were shed. It followed this by slashing 2,000 jobs when it purchased Seibel in 2006.

Oracle is buying Sun for $7.4 billion, with the deal expected to close in the summer after it has cleared the regulatory hurdles.

The shock deal emerged after Sun's talks with IBM fell through, after the company expressed concerns over potential regulatory hurdles.