Oracle to trim staff following ‘toughest quarter’

Following what chief executive officer Larry Ellison called the “toughest quarter in a decade,” Oracle Corp. said Monday it would be trimming its 42,000-strong workforce by as many as 800 people.

Without releasing many specifics about the planned cutback, the company issued a brief statement saying that in early 2002 there would be a reduction of one per cent to two per cent in its global workforce. It explained the move by noting that “Oracle is realigning certain areas to be more efficient.”

The groups to be affected include North America workers in the company’s consulting and sales and government, education and health care divisions.

A major cause for the restructuring was the departure in November of Jay Nussbaum, an executive vice-president in charge of service industries. Some service industries’ employees will now become members of Oracle’s North American sales and consulting groups.

“There is some redundancy there,” said a spokesperson today. Estimates of the layoff size run from between approximately 400 and 800 employees, although the exact number remains unclear, said the spokesperson, adding that the plans are “to, wherever possible, try and give people the option to find something else in Oracle.”

The decision follows Oracle’s announcement earlier this month of second-quarter revenue totalling US$2.4 billion, down from US$2.7 billion the prior year. The company also reported net income of US$549 million, down from US$622.8 million a year ago. New software license sales were also down 27 per cent.

The firm attributed the slowdown to the weak economy, which worsened after the Sept. 11 terrorist attacks in the U.S.

However, at the time of the earnings announcement, Ellison said optimistically that despite the drop in sales, Oracle still garnered US$800 million in operating profit and he predicted that when the economy turned around, “we will earn a lot more.”

He also noted that Oracle’s application server business had seen 52 per cent growth that quarter.

Oracle Corp. Canada Inc. in Mississauga, Ont., is at