What Oracle’s Recent Layoffs Say about Its Hardware Business
Oracle’s layoff pertained to its hardware segment
Earlier in this series, we discussed Oracle’s (ORCL) stock performance in comparison to the S&P 500 Index (VOO) as well as the computer software sector. Late last month, Oracle announced job cuts in its Hardware and Solaris business units.
Oracle recently laid off 2,500 workers involved with Sun products, which include Solaris, SPARC, and storage. Oracle’s server and Solaris efforts emerged from the acquisition of Sun Microsystems. Oracle acquired Sun Microsystems for $7.4 billion in 2010. Before Sun’s acquisition, Oracle primarily specialized in databases and applications. Solaris was Sun’s version of Unix, an operating system that powered its servers.
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In the last several quarters, Oracle’s hardware revenues have been declining. In December 2016, Safra Catz, Oracle’s co-CEO, noted that the company would look into its hardware business. A month later, 450 job cuts were announced, with the majority of them coming from its hardware business.
Relationship between layoffs and cost-cutting in the technology industry
The chart above shows the increases in US tech job cuts. In the middle of this year, Cisco Systems (CSCO) announced the layoff of 1,100 employees, a part of its restructuring plan. This announcement was in addition to the 5,500 layoffs the company announced in August 2016.
In July 2017, Microsoft (MSFT) announced layoffs of less than 10% of its overall sales workforce. CNBC reported that these layoffs would impact 75% of Microsoft’s employees, which are primarily based outside the US.