Oracle Corp. as a whole may be adjusting to the industry shift towards cloud computing at a brisk pace, but its traditional hardware business is falling behind.
The latest sign of the group’s troubles came on Friday after the San Jose Mercury News reported that the database giant has laid off about 450 employees from its Santa Clara, California-based Hardware Systems Division. Oracle stated in a letter to the state Employment Development Department that the affected employees will receive full salary and benefits for 60 days.
Its memo didn’t go as far as divulging exactly what product lines have been hit by the layoffs, and Oracle declined comment. But some information is available from unofficial sources. An anonymous member of worker forum TheLayoff wrote over the weekend that the cuts, which the member pegged at more than 1,800, primarily affected the team tasked with maintaining Oracle’s SPARC processor family. The numbers in the post were contested by another user, but the core claim appears to line up with recent speculation about the future of the chip lineup.
Industry watchers started voicing their concerns earlier this month after the company published a revised development roadmap that appears to show plans for iterative updates rather than significant product releases.
The forum user who leaked the news elaborated that the remaining personnel on the SPARC team will focus only on “sustaining” SPARC, which Oracle obtained when it completed the acquisition of its original developer, Sun Microsystems Inc., seven years ago this week. Given Intel Corp.’s almost complete dominance of the server processor market, the cuts should hardly come as a shock.
They’re even less surprising when considering the financial performance of Oracle’s infrastructure business. The company saw hardware revenues fall 10 percent year-over-year in its most recent quarter, to $1.01 billion. Total sales, meanwhile, were up merely 1 percent to $9 billion on a constant-currency basis despite strong growth in its cloud business.
Oracle co-Chief Executive Safra Katz (pictured) said during the earnings call in mid-December that the leadership team will be “proactively evaluating” the expenses associated with its hardware group, which suggests that yet more cuts may be on the horizon.