Channel Marker

Jun 8 2010   7:22PM GMT

Whoops! Oracle/Sun not looking so profitable after all



Posted by: badarrow
Tags:
Barbara Darrow
IT channel products and technologies
Larry Ellison
layoffs
Oracle
rebates
Sun Microsystems

Remember when Larry Ellison chastised analysts and reporters for forecasting that  Oracle would decimate Sun Microsystems headcount? Oracle was hiring, not firing, he said.

And, remember Ellison promising that the Oracle-Sun combo would be profitable in February?  This was, in fact, in late January as Ellison, Charles Phillips et al. detailed the roadmap for Sun integration into Oracle.

So far things don’t look too perky on those fronts. 

For one thing, Oracle now plans to take a huge charge–up to $825 million–related to its integration of Sun Microsystems, according to a recently amended SEC filing

Oracle said the charge will range from $675 million to $825 million, of which $550 million to $650 million will cover restructuring charges “related principally to employee severance costs,”  according to the amended 8-K form.

Another $85 million to $115 million will relate to “facilities costs” and still another $40 million to $50 million will cover “contract termination costs.”

The news led to a lot of back-of-the-envelope calculations with Oracle watchers extrapolating from the 3,000 Sun jobs cut earlier (incurring charges of $125 million) that  a bloodbath is on the horizon.

It also might explain why the Oracle recruitment frenzy of a month or so ago has disappeared. Poof. Like magic. Sun VARs had said Oracle was poaching their Sun technicians and sales engineers but that flurry ended a few weeks back.

And it might also explain why Oracle has not yet paid VAR rebates on Sun hardware sales from February.

It looks like money’s getting really tight in Redwood Shores.

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