The layoffs announced are the highlight of the company's post-Siebel acquisition guidance call; fiscal performance and predictions are also stated.
Posted Feb 9, 2006
Oracle announced late Thursday at a press conference that it would lay off approximately 2,000 employees in an effort to realign resources after rival Siebel Systems accepted Oracle's $5.85 billion takeover bid on January 31. The job cuts, surprisingly, include original Oracle employees and Siebel newcomers.
Oracle president Charles Phillips opened by noting that the result of the combined entity's integration of product lines and business processes would be "immediate incremental value, delivering over the next four months," before mentioning the effect on jobs at the company. "There has been an over 90 percent acceptance rate of former Siebel employees," Phillips said. "U.S. training is complete as of today, and we are ready to go."
CFO Safra Catz provided more details throughout the briefing regarding the job cuts. "Oracle and Siebel employees have been working together to merge the businesses. We will fold Siebel operations directly into the majority of operational areas. We will retain more than 90 percent of Siebel people, and Oracle employees will be included in the cuts." CEO Larry Ellison indicated that fewer than half of layoffs would be Siebel folk, and most of them would be back office and nontechnical marketing people. The hardest hit among Oracle natives would be the CRM development team, preventing further duplication of effort.
Oracle's commitment to continuing Siebel's CRM efforts was made clear when Catz announced that the entire CRM sales force would be a separate entity, comprising mostly Siebel people and using that company's practices and processes. Phillips amplified this statement, saying, "We're keeping Siebel's sales force, pipeline, accounts, et cetera, intact, and folding Oracle people into it."
Other important points centered on financial performance and predictions. Extra shares outstanding from the buyout of Siebel would be repurchased by Q4 of FY 2007. Oracle's cash generation, predicted to be $1 billion per quarter, would finance this buyback, offset dilution of Oracle's stock value, and fund any smaller, strategic acquisitions Oracle felt were necessary. Catz expected new license revenue growth in Q3 to be 15 to 20 percent year over year, and closer to 10 percent in Q4; these predictions included Siebel contributions Catz described as "marginal." Ellison noted, "We are seeing substantial acceleration in new license growth."
Those new licenses will likely not include Siebel Nexus, however. "Siebel Nexus is going away," Ellison said. "We will continue to support existing Nexus customers, though there aren't many." Because of its lack of standards-based design, Ellison added, "Nexus will not be the basis of Fusion going forward."
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