Sun Slashing 3,000 Jobs As Oracle Deal Delayed

Sun disclosed the planned job cuts in an SEC filing Tuesday, which can be read by clicking here.

Oracle in April said it plans to buy Sun for $7.4 billion.

The U.S. Department of Justice cleared Oracle's Sun acquisition in August, but anti-competitive concerns by the European Union have halted the close of the deal.

In its SEC filing, Sun said its Board of Directors plans to reduce its worldwide workforce by up to 3,000 employees over the next 12 months in order to better align its resources with its strategic business objectives.

The job cuts, which will cost the company from $75 million to $125 million over the next several quarters, were directly attributed to the delay in the close of Oracle's purcahse of Sun.

Sun as an independent company today is definitely feeling the effect of stalling demand as customers wait to see what will happen with the acquisition, said Mark Teter, CTO of Advanced Systems Group, a Denver-based solution provider and Sun partner.

"The delay is not only affecting Oracle's financials, but also Sun's financials," Teter said.

The move now to announce a cut of up to 3,000 jobs is surprising given how close the acquisition is to closing, Teter said. But things could be worse given industry expectations of the kinds of layoffs Sun could expect once the acquisition closes.

"People have been assuming Oracle would have to make some adjustment while waiting for approval," he said. "Many have been saying that once the merger is approved, there will be big cuts of 10,000 to 15,000 people."

The slowdown in Sun's business because of the pending deal is not as bad as it could be, given the press surrounding the deal, Teter said.

For instance, customers who depend on Oracle infrastructures are still buying Sun's "big iron" servers and storage products. Teter said he is not seeing anything like the kind of situations that IBM talks about when it brags that it is converting Sun customers to the IBM platform.

"The slowdown is not because IBM or anyone is grabbing customers, despite what they say," he said. "Customers don't easily move from Solaris to AIX or whatever. You just can't turn around a vendor that fast."