Oracle Seen Meeting Targets With Sun Deal - Barron's

Software company Oracle can still meet its financial targets, even if it means more layoffs than anticipated in its $7.4 billion acquisition of Sun Microsystems, Barron’s business newspaper said on Sunday. The report noted that Oracle has acquired some 60 tech companies since 2005, with ‘disciplined success’. But it said those were mostly software companies, while Sun, which it acquired last month, is a hardware company, making integration a little more problematic.

However, it quoted Pacific Crest Securities analyst Brendan Barnicle as saying Oracle will likely meet its pledge to wring $1.5 billion in operating income from Sun through supply-chain improvements, selling higher-end machines, streamlining Sun’s services business and cutting back-office costs. Barron’s quoted Cowen & Co Analyst Peter Goldmacher as saying Oracle might cut more jobs than the 1,000 it has stated.

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“The ace up their sleeve is, if they don’t get to their milestones in time, they always have the option of laying more people off to meet earnings targets,” he said. “I will be shocked if they don’t lay off more,” the report quoted Goldmacher as saying. “With future job cuts still an option, investors have some insurance that Oracle can achieve its financial goals, even if the Sun transition doesn’t go smoothly,” Barron’s said. (Reuters)