REDWOOD SHORES, Calif. -- Oracle CEO Larry Ellison capped off day-long event here Thursday at his company's headquarters to tout his plans for the newly merged Oracle/Sun and to lay into earlier reports of massive layoffs at Sun Microsystems post-merger.
The event was for industry analysts, press and customers alike to hear the firm's strategy now that all of the hoops have been cleared and it has taken ownership of Sun lock, stock and servers. A report earlier this month by a UBS analyst suggested Oracle (NASDAQ: ORCL) would cut as many as 13,800 of Sun's 27,000 employees.
"I was very upset to see articles that said we would cut half of Sun's organization. That's a highly irresponsible thing to make up and people should be ashamed of themselves. Those poor Sun employees have been through enough without having to go through this," said Ellison.
"The truth is, we're hiring two thousand people over the next few months to beef up the Sun sales and engineering base. That's twice as many as we're letting go," he added. Staffers in the lobby, Sun and Oracle alike, wore red buttons that said "We're hiring!"
"We're not cutting Sun to profitability, we're growing Sun to profit," Ellison said. "How long do investors have to wait? Not at all. We'll be profitable in February, we'll be profitable in March, we'll be profitable in May. [Sun] will be contributing to Oracle profits in the first full month after the merger," said Ellison.
While espousing the opportunities that having the entire stack from CPU to applications can offer he said things like encryption can be moved to the CPU and some features from the database can move to the operating system Ellison said he expects his relationships with other vendors to remain the same.
"The largest reseller of Oracle database software is SAP. The largest integrator of Oracle database is IBM. I don't think SAP picked it because they like me personally. Maybe, but I don't think that was it," he joked.
Ellison said the real clean-up at Sun won't be from headcount reduction, which is what the UBS report was based on, but on cleaning up Sun's supply chain. As it turns out, Sun's parts supply chain is a real mess and extremely inefficient. Plus, Sun has a large number of SKUs, more than 40. A reduction in the number of servers and better supply chain management will give the cuts in expenses needed.
"The supply chain thing is huge," Jean Bozman, research vice president at IDC told InternetNews.com. "During all the time Sun wasn't profitable, Wall Street didn't like the degree of R&D contribution, but Oracle said they are increasing it."
Oracle said that during the course of due diligence on Sun, they realized the supply chain was not efficient and cleaning that up will make an impact on the top and bottom line. Rather than cut staff, Oracle said it could realize profitability through improved efficiency in how Sun buys its parts.
Bozman agreed that was a better path than cutting heads. "There were aspects of Sun's operations that were spending a lot more than they should have, and that's what [Oracle] is fixing," she said.
In a press conference following Ellison's speech, Sun veteran John Fowler, who now holds the title of executive vice president of hardware engineering, said that they have already begun implementing these changes and it will continue into next year. "Oracle is a much more business-efficient company," he told the group.
Fowler finally put an end to a rumor that has been floating for months but never formally acknowledged or denied: the "Rock" processor is indeed dead. Rock was intended to be a floating point-intensive processor that handled huge number crunching jobs but languished in development hell for years.
Rumors first surfaced last summer in the New York Times that Sun had killed development of the processor but were never acknowledged, but Fowler did say that Sun's processor roadmap no longer included that particular part.
Judson Althoff, senior vice president for Oracle's worldwide alliances and channels, said Oracle would continue working with large systems firms like HP and Dell despite being in the server business. "We do not expect that to change. On the services side, while we're expecting competition with IBM, we'll still continue our working service partnership," he said.
Despite the grief Oracle and Sun have been through over MySQL and the fuss kicked up by MySQL creator Michael "Monty" Widenius, Oracle officials said the company plans to continue to invest in the database and open source products in general.
"We think open source is a fine development model and a fine business model and we'll continue down the path of those business models within Oracle. If down the road we acquire a company with open source products, we'll be happy to continue using that model," said Edward Screven, chief corporate architect for Oracle operating systems and virtualization strategy.