Oracle Cutting more Sun Jobs

Associated Press

 

Oracle Corp. is cutting more jobs as part of its takeover of slumping computer-server maker Sun Microsystems.

Oracle, the world's biggest database-software maker, said in a regulatory filing Friday that the new round of cuts would mostly hit employees in Asia and Europe.

It didn't specify how many employees would be laid off. But it did say the new restructuring would be at least twice as expensive as the one Oracle initiated immediately after closing the Sun deal in January.

The new cuts will cost Oracle $675 million to $825 million. The previous cuts, which are ongoing, will cost an estimated $325 million.

Affected employees started to get notified May 28.

Oracle declined further comment. Oracle had 106,492 workers as of the end of February.

Sun had already cut deeply before Oracle took it over.

Last October, while the $7.4 billion takeover was being held up over antitrust concerns in Europe, Sun announced plans to jettison 10 percent of its work force, or up to 3,000 jobs. It had already cut 7,600 workers in three previous rounds of layoffs.

When Oracle was allowed to consummate the deal in January, its CEO, Larry Ellison, said he planned to hire more people for the Sun businesses than he would fire in the first few months after the acquisition. He estimated the Sun layoffs in that period would be about 1,000 workers.

The deal was a lifeline for Sun, one of the world's biggest server makers whose losses were mounting, and a way for Oracle, one of the world's biggest business-software makers, to challenge IBM Corp. in more markets.

HP Revamps Service Unit

The Wall Street Journal

Tech Giant to Cut 9,000 Jobs, Automate Computer Centers as It Looks to Reduce Costs

 

Hewlett-Packard Co. said it plans to shed about 9,000 workers from its technology-services division while investing $1 billion to modernize the unit, as it moves to jumpstart growth in an industry that's lagged the economic recovery.

H-P's restructuring comes two weeks after the Palo Alto, Calif., company said quarterly revenue in its services division—which runs computer systems for large companies and governments—rose 2% from a year earlier but declined by 3% when adjusted for currency differences.

In contrast, other H-P divisions such as personal computers saw sales increase more than 20% year over year.

Rival International Business Machines Corp. also reported relatively weak tech-services growth in its most recent quarter, with sales up 4% from a year earlier but declining 2% when adjusted for currency.

The slow growth in services is due to industry-wide shifts in how companies purchase tech services, said Peter Bendor-Samuel, chief executive of Everest Group, which consults with companies on tech-services decisions. Companies are looking to sign smaller, shorter outsourcing deals, rather than the multi-year contracts that previously were standard.

To profit on smaller deals, services providers have been trying to automate their offerings, replacing high-cost workers with software that performs certain functions automatically.

Tech services are crucial to H-P, which has bet big on the business. In 2008, H-P acquired outsourcing giant Electronic Data Systems for $13.6 billion, adding 142,000 workers. Since then, H-P has worked to trim EDS's costs, largely through a plan to lay off 25,000 workers. Tech services forms nearly a third of H-P's total revenue.

The 9,000 layoffs announced Tuesday are on top of the earlier 25,000 cuts, an H-P spokeswoman said, and represent about 3% of the company's overall work force, which stood at 304,000 in October.

The company is still in hiring mode and said it plans to bring on about 6,000 additional employees, largely in sales roles. H-P didn't say how many employees it has in the services unit or how many of the jobs being eliminated are in the U.S.

With Tuesday's announcement, H-P intends to boost profits and lower costs to customers by developing "fully automated" data centers, the giant computing rooms used to run corporate technology functions, said Ann Livermore, who heads H-P's services division.

H-P's strategy of growing profit through acquisitions and layoffs is a hallmark of Chief Executive Mark Hurd. Since Mr. Hurd took over H-P in 2005, the company has repeatedly increased profit partly by paring down its expenses.

In mid-2005, Mr. Hurd announced a plan to cut more than 14,000 workers, or about 10% of H-P's work force at the time. Last year, during the recession, H-P announced plans to cut another 6,000 jobs and also instituted company-wide pay cuts.

In a Tuesday conference call, Ms. Livermore said H-P has now "closed the chapter on the EDS integration." She said H-P is now focused on growing its services division.

The unit runs tech systems for large companies. In some cases, clients outsource all of their computing functions, including email, data storage and corporate networks—to H-P. In other cases, H-P takes over a limited set of functions, like processing health-care claims for state governments or reservation systems for airlines.

Bill Kreher, an analyst with Edward Jones, said H-P has "revenue momentum" that's outstripping competitors, even with the slow services growth. By investing in more highly automated services systems, he said, the company should be able to increase its services profits.

The services unit had earnings last quarter of $1.38 billion on revenue of $8.7 billion. The division's operating margin was 15.9% last quarter, up from 13.8% a year earlier.

H-P plans to take a $1 billion charge over several years for the latest cuts. It expects the restructuring will generate $500 million to $700 million in annual savings.

Business Software Maker CA to Cut 1,000 Jobs

Associated Press

Business software company CA Inc. said Tuesday that it's cutting 1,000 jobs - or about 8 percent of its work force - and consolidating offices as part of a restructuring plan to reduce costs and become more efficient.

The company also steered earnings expectations to the lower end of its previous guidance for the year.

"I recognize that the actions we're taking are difficult. But in the end, they will make CA stronger and more competitive," CEO Bill McCracken said in a memo to employees Tuesday.

The job cuts will occur mainly in North America and mostly be completed by the end of September, according to a filing with the Securities and Exchange Commission.

The Islandia, N.Y., company has already shed 3,100 positions over the last three years amid office closings.

The reductions are part of CA's efforts to mold the company to better fit its new business strategy of focusing on emerging technologies, high-growth markets, and task management software. A key area of interest is cloud computing, where it would handle software and data storage for corporate clients off-site.

"We are taking the necessary steps to further align our organizations and skills with CA's strategy," McCracken said. "The industry and the market are changing, and we have to change, too."

CA will be consolidating an unspecified number of offices, which could include closings, reductions in office space and merging of locations.

The company expects to incur a $50 million pre-tax charge in the fourth quarter, of which $47 million would be for severance payments and the rest related to facility consolidations.

CA also said full-year earnings will come in at the lower end of the range it had previously given. It expected to earn $1.60 per share to $1.71 per share for the year, excluding one-time items. Analysts polled by Thomson Reuters were expecting $1.69 per share, on average.

Sony to Cut 8,000 Jobs, Close Factories

As posted by: Wall Street Journal

TOKYO -- Faced with deteriorating prices of televisions and a slowdown in consumer spending, Sony Corp. plans to cut 5% of its global electronics work force and shutter up to six factories.

Sony said Tuesday it aimed to reduce the electronics division's annual costs by more than 100 billion yen ($1 billion) by the end of its fiscal year ending March 2010, embarking on one of the most aggressive belt-tightening measures among major electronics companies.

It plans to cut 8,000 of the roughly 160,000 jobs at its electronics division by March, while also targeting at least as many reductions in temporary and seasonal workers.

Like its rivals, Sony is grappling with a global economic slowdown that is sapping demand for new TVs and digital cameras during the crucial holiday shopping season. It is also hurt by the sharp rise in the yen against major currencies, which has cut into profits by reducing its overseas revenue when converted back into the Japanese currency.

The holiday shopping season is providing a critical test for electronics makers, which must not only provide an appealing lineup, but must also entice cash-strapped consumers with major mark-downs on their products. Sony and others lowered prices of some flat-panel TVs by as much as 30% at major U.S. retailers in recent weeks to keep pace with discount brands like U.S.-based Vizio Inc.

Japanese rival Panasonic Corp. last month lowered its earnings forecasts for the fiscal year and slashed capital spending plans in an attempt to weather the downturn. South Korea's Samsung Electronics Co. said Monday that demand was weak across all of its major businesses in the December quarter and that it could cut spending by as much as 30% next year to seven trillion won ($4.8 billion).

Sony already cut its fiscal-year net profit forecast by nearly 40% to 150 billion yen in October, citing weakness at its electronics business and the strong yen. Sony said it will announce the financial impact of its latest cost-cutting plan when it next reports quarterly earnings results in January.

Sony said it plans to close up to six of its 57 manufacturing sites by March 2010. Sony wouldn't disclose specifically where the job cuts would come from, but said they would include Japan.

The company's steps call into question the sustainability of its electronics-business turnaround engineered by Welsh-born American Chief Executive Howard Stringer. Under Mr. Stringer, the first non-Japanese to head the Tokyo-based company, Sony posted a record net profit for the fiscal year ended March 31.

"Even though we were able to improve our own standing with the restructuring plans, the market conditions have worsened to the point that it overtook those improvements," said Naofumi Hara, a senior vice president at Sony. "The No. 1 factor is that the economic environment has gotten far worse than we expected."

Mr. Stringer has pushed the company's electronics division, which accounts for almost 70% of Sony's total sales, to be bold and deliver innovative products like it once did with its iconic Walkman. In recent years, as Sony has restructured, it has seen Apple Inc. wrest control of the portable-music-player industry that it once ruled and has seen Samsung overtake it in TV sales.

Sony said it plans to reduce investment in the electronics business by about 30% in the year ending March 31, 2010. It will also outsource some of the production of certain chips and postpone an investment to expand an LCD television assembly factory in Slovakia.

To combat the yen's rise against the euro, Sony said it would start in January to raise prices on certain products sold in Europe. The company said it also will look to scale back or withdraw from unprofitable or noncore businesses.