Layoff whispers get louder at Oracle
Published: 10 Jun 2002 07:32 BST
The layoff watch at Oracle continues.
Despite chief executive Larry Ellison's denial on Wednesday that the company would announce additional layoffs, analysts continue to cite sources who indicate the company is cutting jobs.
Credit Suisse First Boston analyst George Gilbert said in a research note on Friday that Oracle is cutting about 1 percent to 2 percent of its work force, or roughly 400 to 800 employees. Oracle has about 40,000 employees.
According to Gilbert, who cited "industry sources," the layoff process began late last week. "Primary cuts are centred in CRM (customer relationship management software) development with additional reductions primarily in sales and marketing," Gilbert said.
"These cuts do not surprise us given Oracle's limited traction in CRM and the need to resize the heavy investment," he added.
A company representative confirmed Monday that Oracle did cut 200 employees from its development staff. Oracle wasn't immediately available Friday to comment on the Credit Suisse First Boston report.
Gilbert said Oracle's 400 to 800 job cuts would equate to $48m to $95m in cost savings. Gilbert said Oracle is cutting its work force to save $100m and hit its earnings targets for 2003.
The Gilbert report could set up an interesting earnings conference call 18 June. Ellison on Wednesday said financial analysts were "irresponsible" for speculating that the company would miss estimates.
"They're wildly irresponsible (with the stock market) on the way up. Now they're being wildly irresponsible on the way down," he said.
Ellison said the company will at least meet analysts' predictions for a profit of 12 cents per share on revenue of $2.6bn for its fourth quarter, which ended 31 May.
Ellison's comments gave Oracle's beleaguered stock a quick boost, but those gains evaporated on Thursday after analysts said the company's announcement was short on specifics. Oracle has also been caught in a controversy over a contract with the state of California and has been facing stiffer competition from IBM and Microsoft.
Morgan Stanley analyst Charles Phillips said investors are taking Ellison's comments to mean Oracle's sales are improving. Ellison's confidence about its fourth quarter may mean little for the company's licence sales, Phillips said.
News.com's Wylie Wong contributed to this report.
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