Oracle is going to cut jobs in an effort to make its Sun Microsystems Inc acquisition profitable, according to analysts.
Oracle, which has about 84,000 full time employees, could cut at least 5,000 jobs according to Shannon Cross, an analyst at Cross Research. The cuts would come mainly in hardware division, which is now declining.
Some analyst put the cuts as high as 10,000 jobs as it seeks profitability, according to Toni Sacconaghi, an analyst at Sanford C. Bernstein & Co said.
The deal is expected to generate $1.5 billion in its operating profit and increase EPS by 15 cents in the first year, particularly in database and operating software’s.
Meanwhile, Sun reported first quarter revenue of $2.990 billion and net loss of $65 million or $0.09 per share, and would likely reduce its workforce in November as much as 6,000. The company is already paring payrolls to cope with the economic downturn.
In separate statement, JMP securities maintains Oracle Performing rating on market as it enters to Sun acquisition for 9.50 per share in cash, or $7.4 billion or $5.6 billion net of Sun's cash and debt.
Sun previously rejected IBM's offer of about $9.40 a share, a share price it regarded as too low from the original $10 a share.
Shares of Oracle rose to 76 cents to 4.04% at $19.58 and Sun jumps 4 cents to 0.46% at $9.19 in NASDAQ trading.