Oracle Corporation (NASDAQ: ORCL) will deepen its cost cuts as part of its buyout of Sun Microsystems. Sun employees have already endured years of job reductions as the firm’s revenue and market share were damaged by management mistakes as it fought to maintain its server business against larger rivals which included Hewlett-Packard (NYSE: HPQ) and International Business Machines (NYSE: IBM).
In an SEC filing, Oracle said it would increase its restructuring expense for the Sun deal to as much as $1.1 billion. The original estimates for the process were only $325 million. That number was amended yesterday:
Oracle estimates the additional costs related to this Amendment to the Sun Plan will be between $675 million and $825 million, the substantial majority of which will require the outlay of cash. Oracle expects that $550 million to $650 million of these additional costs will be restructuring charges related principally to employee severance costs.The market does not think much of the Sun deal or Oracle’s prospects. Shares are off 10% this year compared to a 2% drop in the NASDAQ.
Larry Ellison and senior Oracle management will not take compensation cuts as a part of the Sun restructuring. In April Ellison said he would sell $1.32 billion in Oracle stock over the next ten months.
Douglas A. McIntyre
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