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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."
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?
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.
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.
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.
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
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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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.
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.
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