US company Oracle to lose 5,000 staff

 

US computer company Oracle is to lay off 5,000 people as it combines with PeopleSoft Inc., the business software rival it acquired for $10.3 billion after a bitterly fought takeover battle.

 

The layoffs, which were in line with Wall Street expectations, represent about 9 percent of the companies' combined work force of 55,000, Oracle said. Financial terms, including charges or cost savings, were not disclosed.

Oracle also pledged to keep more than 90 percent of PeopleSoft's product development and support employees and deploy new versions of PeopleSoft's software over time. The acquisition was concluded a week ago.

The ongoing support of PeopleSoft products - used by companies to manage payroll, human resources and manufacturing operations - was a point of contention during the 18-month takeover battle, with many high-profile customers fearing they would be left hanging.

"Oracle will have the resources to deliver on the development and support commitments we have made to PeopleSoft customers over the last 18 months," Oracle Chief Executive Lawrence Ellison said in a statement. He has pledged to provide technical support for PeopleSoft software for at least 10 more years.

Notifications of layoffs began on Friday and the majority of the cuts will be completed over the next 10 days, Oracle said. Financial details are expected to be laid out on Jan. 26 at a meeting for Wall Street analysts in New York.

Oracle had said last June that it expected about 6,000 job cuts from the merger.

In Pleasanton, California, the site of PeopleSoft's headquarters, news of the layoffs had been awaited with dread.

On Thursday, Oracle, the largest private employer, told the town's administrator that about 900 of the city's 3,500 PeopleSoft employees will eventually be let go, though the company eventually may expand again, said Nelson Fialho, the city manager.

"It's not as bad as we thought it would be," he said, "They're committed to a presence in Pleasanton."

Oracle shares rose 15 cents, or 1.1 percent, to $13.63 on Nasdaq. In after-hours trading, its shares were unchanged.

Marked by heated courtroom battles and the ouster of PeopleSoft's chief executive, the 18-month takeover saga finally concluded after Oracle sweetened its offer and won regulatory approval for the deal.

The deal gives Oracle the heft to compete against SAP AG (SAPG.DE), its European rival in business planning software, but also presents technical challenges as the company works to create a combined Oracle-Peoplesoft software package, said Clark Chang, an analyst with Fulcrum Global Partners.

"The real revenue synergy of this acquisition happens when the combined version comes out in about three years from now," Chang said.