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Sun Microsystems To Cut 3,000 Jobs As Oracle Deal Drags On
afgun writes with news that Sun will be shedding 3,000 jobs, roughly 10% of their workforce, as they continue to lose money while waiting for EC regulators to approve their acquisition by Oracle. "Oracle Chief Executive Officer Larry Ellison said Sept. 22 that Sun is losing about $100 million a month as the transaction is delayed by the EU probe." James Staten, an analyst with Forrester, said, "The longer a cloud of uncertainty hangs over Sun, that drives customers into delays of purchases or into the hands of competitors. This is a very trying time for Sun and Oracle as they wait for an answer." A spokesman for EU Competition Comissioner Neelie Kroes said today that she "expressed her disappointment that Oracle failed to produce, despite repeated requests, either hard evidence that there were no competition problems or a proposal for a remedy to the competition concerns identified by the commission," and that "a rapid solution lies in Oracle's hands."
"The longer a cloud of uncertainty hangs over Sun, that drives customers into delays of purchases or into the hands of competitors...
I just don't see why Sun needed to use the cloud for uncertainty. Companies have been doing this for years without the cloud. Now they can't control it!
"I like to lick butts!" by MobileTatsu-NJG (#32700246) (Score:5, Informative)
Erm, she is called Neelie Kroes.
When you shoot a mime, do you use a silencer?
I don't really get this. If you Oracle on Solaris is a good solution for you today, will it become a bad solution if the merger isn't approved?
Also, how do you produce "hard evidence that there were no competition problems"? Tell them you looked really hard but couldn't find any counterevidence?
I'm ambivalent about Sun and am definitely not an Oracle fan, but I don't really see the problems here.
Dewey, what part of this looks like authorities should be involved?
Yeah, because when a company is tight on cash and needs to shed some people, they always dump the "top engineers" first.
I don't even know why Sun paid a billion for it in the first place. IIRC, most of the original people behind it have left and started their own companies around mysql open source forks, or gone to other projects. The supposed "ownership" Oracle will have seems mostly worthless. If they were rational they would have jettisoned MySQL at the first sign of EU resistance.
That said, I have little sympathy for the EU here. They're taking hundreds of millions of dollars out of Oracle/Sun's coffers due to the delays, then turning around and saying that the burden is on Oracle to prove it's innocence. If the EU is going to be so disruptive to businesses, they need to act quickly and with their own resources. I'm no fan of corporations, but the EU looks to be clearly in the wrong here.
They both operate in Europe as well. When you're a large, multinational corporation you generally have to accept regulatory practices of each nation you wish to operate in.
Does it do the public any good, if the regulatory agency kills the competitor being acquired, by delaying a decision?
By the time the acquisition is approved or rejected, Sun will be basically dead, and barely have any role as the competitor, anyways.
Why?
They aren't elected by locals losing their jobs, those probing the companies are appointed, and thus have no interest in rushing the decision.
Also a merger between the two companies will likely result in even more job cuts.
Did the US regulators have similar concerns? If not, why not? If they're genuine concerns - they sound like it - why is it just the EU that's following them up?
There generally seems to be a certain amount of frustration that the EU is holding up companies of US origin, although actually they have significant financial impact (and offices and presumably regional headquarters and subsidiary companies) in Europe too. Presumably Oracle and Sun *themselves* could have predicted these hurdles if they'd done their homework - is it really that outlandish to expect that merging two leading (albeit in different markets!) database companies would be a worry for the regulators?
Presumably Oracle and Sun would be welcome to merge if they had terminated their entire presence in Europe - they're not proposing doing that and one assumes it's because Europe is a big enough financial interest for them that they believe it's *worth the wait*. They may not have a choice, in practical terms, but one assumes they have years / decades of making money from their European dealings so it's not like the EU is just a plain dead weight for them.
This is the same EU that is cracking down on anticompetitive behaviour from MS and Intel, which generally seem to be popular moves with folks here. Would the tech industry really be in a better position if they reduced their scrutiny? Or if they applied it only to certain companies.
To me it seems a bit "convenient" that, in an economy where many jobs have to be lost anyhow (and as a merger is occurring, which may also naturally lead to job losses) people are blaming job losses solely on the regulators doing their jobs and not on sharp practice, opportunism or plain lack of co-operation from large multinationals operating in a cutthroat market.
Apple will be able to cherry pick the top engineers from Sun and continue its relentless assault on every other version of Unix (and suck unix-alikes like Linux). GO APPLE!
Go zealots! Save that economy!
Top engineers left for greener pastures years ago. Few people with highly valued talent are going to stay aboard a sinking ship.
Top engineers cost more. You can keep two incompetent engineers or keep one competent one. Do you want to announce 3,000 job cuts, or 6,000?
I am TheRaven on Soylent News
To prevent a large monopoly from forming around a certain product, service or market? Seems like a good enough reason to me. Monopolies only benefit themselves (the companies that create them) and not consumers. In the EU, at least the government still cares about protecting the consumer. In the US, the companies run the show and the politicians.
Did the US regulators have similar concerns? If not, why not?
. . . like GM, Chrysler, Wall Street, Savings & Loans . . . etc. All looking for government bailouts.
Oracle's Ellison was willing to bankroll the rescue of Sun with his own money.
With so many other headaches on their plate, the government was probably just happy to see a solution for Sun that didn't require gobs of taxpayer money.
Schroedinger's Brexit: The UK is both in and out of the EU at the same time!
To prevent a large monopoly from forming around a certain product, service or market? Seems like a good enough reason to me. Monopolies only benefit themselves (the companies that create them) and not consumers. In the EU, at least the government still cares about protecting the consumer. In the US, the companies run the show and the politicians.
The unfortunate situation in this case is that the probe is using a "guilty until proven innocent" approach of things, thus causing 3K people losing their jobs. Where is the actual, sufficiently reasonable evidence that this merger will result in a monopoly? What other industries will get affected by it? IBM? MS? Large DB software writers? Server manufacturers? MySQL? Who are these potential consumers that must be protected by this evil merge of doom?
This shredding of 3K employees, probably translate to 3K households being affected, in an already affected job market. These are also white collar or almost-white collar workers who, as consumers to other services, will have to cut their spending. And that trickles down to blue collar jobs (in particular in the service sector), possibly affecting several other thousand households (not to mention the impact on the local economies where the bulk of the job shredding take place.) In market economy whether is in either side of the Atlantic, the less that white collar employees spend in their local economies, the more that it affects those that are under a lower income bracket.
So much for protecting the consumer. I agree that monopolies must be stamped out, but this is ridiculous.
Larry doesn't mind; the EU delay gives him a scapegoat for the layoffs.
Those of you fixated on MySQL: Sun sells hardware, software licenses and contract support to enterprises that use SQL Server, DB2, SAP and other direct competitors of Oracle, meaning the some DB2 users (for instance) will find themselves relying on Oracle for support of certified DB2 platforms... MySQL may be the least of whatever "competition problems" the EU has in mind
Lurking at the bottom of the gravity well, getting old
INSERT INTO oracle
(acquisitions)
SELECT employees
FROM competitors c
WHERE c.Company = 'mysql';
ALTER TABLE oracle RENAME COLUMN acquisitions TO interns;
Are you sure you would like to commit the following transactions?
Oh, nonsense. An organization the size of Oracle had to know that a merger like this would attract regulatory scrutiny. Every single news story about this has brought up that regulators would be looking at this one carefully. This shouldn't be a surprise that it's getting attention. Also, anyone who's paid attention to the Microsoft battles with the EU should have been aware they the EU competition regulators are much stricter than the US regulators.
Basically, for Oracle to pull this deal, they had a responsibility (I'll even go so far as to call it a fiduciary duty, since it's apparently costing them lots of money) to be ready for this scrutiny. This story seems to indicate that they weren't.
Not quite. In the U.S. the primary concern of anti-trust review for mergers and acquisitions is if it benefits or harms the consumer. In the EU, the primary concern is if the merger adversely impacts competition in the market. The failed acquisition of Honeywell by GE was blocked by the EU after being approved by the U.S. The U.S. review stated that bundling of avionics and engines, with some oversight of aircraft leasing by GE would reduce costs for aircraft and, as such, would not harm the consumer. The EU ruled that the merger would provide GE an unfair advantage against European jet engine manufacturers and blocked it.
But they aren't Rational. Rational is owned by IBM.
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Also a merger between the two companies will likely result in even more job cuts.
Sun has no way of surviving on its own at this point. So Sun is either acquired, or everyone at Sun loses their jobs, ala SGI. By the time this regulatory investigation completes there will be few left to cut.
Read TFA more carefully! What Sun ACTUALLY has said is that the cuts are already part of a 1 year plan. Their complaint is that by holding up the deal, the EU is delaying FURTHER CUTS that they can't make until they are sure there will be Oracle personnel to fill those roles.
That is, they really wish the EU would hurry up and OK the deal so they can fire more people faster.
Other than that, Sun's problems are related to the delays in the deal only by coincidence.
The EU has listed specific concerns and is perfectly happy to move the process forward as soon as Oracle addresses them. It has not done so. Yesterday, right here on /. we read one suggestion (spin off MySQL) that would certainly take care of it.
As for U.S. regulators, it's no surprise they've already OKed it. They'll crack the sound barrier getting the rubber stamp out if your market cap is big enough.
If they were rational they would have jettisoned MySQL at the first sign of EU resistance.
The fact that Oracle didn't do exactly that is really the strongest indication that Oracle really did have some anticompetitive intent with the acquisition. I can't really see what (nefarious schemes to kill it off would most likely be unsuccessful, as would locking it in, etc), but then I could never really see what Oracle could get out of the acquisition.
They're taking hundreds of millions of dollars out of Oracle/Sun's coffers
Would Sun magically stop bleeding if the merger completed? Maybe if Ellison went 'k thanks oh btw you're all fired' on the first day. But really, in the short term I don't see the schedule of the merger really affecting the scale of the losses. The uncertainty of Suns customers wouldn't be ameliorated by having Oracle finalized as an owner, so pretty much the only thing that'd change would perhaps be the interest rate on some loans.
It simply isn't the EU that's causing the losses and they'd be there either way.
And there is no chance in hell Sun/Oracle is using this as an excuse to lay off some unprofitable workforce!
I think there's very little chance of that. Everyone knows massive layoffs are an inevitable consequence of most large-scale mergers, so no one is going to hammer Oracle too hard if they lay some people off when the merger is complete. Given that, they have little to gain by forcing Sun to lay people off right now. Also, there's no doubt that other companies, especially hardware manufacturers, are doing everything they can to exploit the uncertainty and poach Sun's customers. IBM and HP have both admitted as much. So, while the $100 million a month figure may or may not be exaggerated, Sun is definitely losing customers, and therefore revenue, at a very rapid pace these days because of this delay.
Also, until the Change in Control takes place, the companies are still required to operate as two separate entities. If it was discovered Oracle was exerting enough control over Sun to order them to shed employees, Oracle would be in a heap of trouble with regulators on both sides of the pond.
It's not the EU that is causing these job losses, it's Sun's piss-poor management that caused them to need to be bought out in the first place.
--"insert clever quote here"
Exactly right. Chances are Ellison is loving this since he can blame the carnage on the EU, he gets SUN to take all the charges for the layoffs, and he gets rid of people he would have fired the day after the merger closed anyway. Only interesting question is if Schwartz and SUN decided who got canned or if Ellison and Oracle are deciding. Chance are SUN at least consulted with Oracle on who got the ax.
@de_machina
There *are* US regulators??
you had me at #!
The US is a Common Law country, for the most part, and almost all European countries use Civil Law/Roman Law [with the exception of England, Wales, Ireland and Northern Ireland, but not Scotland]. The systems are very different in all aspects. From the power of judges to the nature of precedents.
The EU is very active with regards to competition law due to the nature of the institution. The European Union is NOT a federal government, and each member country is still a sovereign country.
The EU and associated institutions legislate, monitor and adjudicate only on matters that are of importance to the whole community. Trade is centrally regulated with the goal of creating one large market for products, services and employees/employers. These are implemented locally within in each national system of law.
However due to the fact that each country may have different or other sets of laws and regulations related to products, take food safety as an example, if these laws stop/hinder products from other EU countries they may be in conflict with central EU treaties. Each country is looking to protect its own industries and jobs while at the same time hoping to win in other markets.
So because each member country is always looking for an advantage, they all work to make sure they are not getting treated unfairly. The result is an army of watchers intent on keeping the playing field *exactly* equal for all regardless of origin.
-----
Branches of American companies in Europe are not treated any different than European companies, the EU and it's member states don't care about the origins of a company - only the jobs, taxes and advances it makes possible in *their* country. That's why it's extra amusing to see angry Americans crying over the treatment so called "American" companies get in Europe.
You are a very, very stupid person. Do you even know how much of Oracle and Sun's revenue comes from Europe? Or how many thousands of people work for them in Europe?!
They're VERY happy to make a lot of their money in Europe, and if they want to continue they have to follow local laws!
The same applies to large European companies doing business in the US! Recent examples include the Nokia's purchase of Nortel.
Imagine you are a top engineer working for sun. I know it's a stretch, but try and hang with me here. Now imagine that you knew Sun was going to cut 3,000 jobs. You probably would, at the very least, spruce up your resume. You also might start actively looking for a new job. At the very least you'll probably actually answer the phone when the headhunter that has been bothering you calls again.
The problem with top engineers is that they generally have the skills and contacts that it takes to move fairly easily to a new job, but "fairly easily" still takes a bit of doing, and the more time you have beforehand, the better. So when things begin to get dicey at a company the best employees are often the very first to jump ship. After all, why go through the uncertainty of a round of layoffs if you don't have to?
In fact, right now only the very worst of Sun's employees are not actively looking for a new job. Only the folks that know that there is no way that they'll land a comparable job somewhere else are dedicating their resources to hanging onto what is clearly a sinking ship. Everyone else is moving towards the lifeboats.
Because they aren't "american companies". They are multinational corporations. They have offices and subsidaries in Europe and probably a dozen other places all around the world. Their HQs happen to be in the USA, but aside from that they're only "american" when appealing to patriotism serves their bottom line.
Assorted stuff I do sometimes: Lemuria.org
I don't suppose it has anything to do with Oracle owning Peoplesoft, which competes directly with SAP (a European company)?
Afaict what tends to happen is that they start with early retirements, that means the oldest slice of your workforce, possiblly the most experianced too. OTOH they were people you would probablly lose in a few years time anyway due to normal retirement.
Then they tend to go for "voluntary redundancies", basically anyone who leaves gets paid extra for doing so. This means all your most employable people go find another job. Even if there is no payment for leaving people who can leave are likely to do so because they can get a more secure job elsewhere.
Only if both of those fail to cull enough people do they go for compulsary redundancies.
note: i'm known as plugwash most places but i screwd up registering that here somehow in the past and now can't register
"Monopolies only benefit themselves (the companies that create them) and not consumers"
Well, we can debate if the fruit of monopolies has benefited consumers:
Xerox:
Ethernet
Press->Interpress leading to Postcript at Adobe
Laser Printers
Graphical User Interface
AT&T:
C and C++
UNIX
Laser
Transistor
IBM:
FORTRAN
DES
Fractal Science
Magnetic Disks
DRAM
"Yes, the problem is that the rank-and-file know exactly which half could be cut."
Sure, the other half.
While OS X Server is real underrated state of art UNIX which can do amazing things, Apple isn't and can't be a "server" competitor unless they allow OS X Server to run on "generic" x86.
While not widely known, OS X server can be used as a client, you can even play all the games on it even with better performance. So, they can't make "blade only" Apple OS X server. It would mean the end of "OS X working only on Apple hardware". I mean it is not AIX.
Forget everything, Apple can't compete in "support" department for servers. There is Big Blue there, Dell there, HP there and of course, Sun with decades old agreements and happy customers who expects same kind of service.
Of course, if you consider the things you can do with distributed computing (Xserve), spotlight (server version), it is sad but industry hates brand hardware without any competition. Java's (especially J2EE) success and mainframes coming back to life is also related to that trend, people choose Java because it will work anywhere, any CPU and even any OS with minor modifications.