5,000 Pink Slips at PeopleSoft

January 18, 2005 (PLANSPONSOR.com) - The pink slips were flying at HR software maker PeopleSoft this past weekend, as new owner Oracle said it would terminate 5,000 workers in the wake of its $10.3 billion takeover.

That is actually a bit less than the 6,000 workers Oracle envisioned eliminating when it first set its sights on PeopleSoft 19 months ago (see Pac Man Rules Software Makers: Oracle Bids for PeopleSoft ). At that time, Oracle planned to jettison at least 6,000 PeopleSoft employees, according to court testimony during the tense legal battle leading up to the takeover (see Ex-CEO Takes Stand in PeopleSoft/Oracle Trial, Defends Defensive Tactics ).

As the year wound to a close, Oracle Corporation fired PeopleSoft’s co-president and chief financial officer, Kevin T. Parker, and three other top executives (see More Pink Slips at PeopleSoft ), and co-founder and then-PeopleSoft Chairman David Duffield’s recent resignation surfaced about that time as well.

Piper Jaffray & Co. analyst Tad Piper believes Oracle still intends to reach its original target of 6,000 layoffs, but expects the company to make the remaining job cuts very gradually, according to CBSMarketwatch. Oracle’s desire to placate PeopleSoft’s 12,750 customers is one of the reasons the company curtailed its layoff plans, said Piper, a point of interest to plan sponsors who rely on PeopleSoft for their HR administration. Most HR administrators and other PeopleSoft users who spoke with PLANSPONSOR this fall were in no real rush to find another solution should the Oracle takeover attempt succeed (see Hanging Tough ).

PeopleSoft ended 2003 with more than 12,000 employees, according to its latest regulatory filing, but is reported to have only about 11,775 at present. Richard Davis, managing director of Needham & Co., said last week that he expects Oracle to cut 80% of sales jobs and up to 90% of administrative jobs at PeopleSoft, but keep the bulk of its research and development team (see Oracle: PeopleSoft Layoffs Could Come within Days ). In a press release Friday, Oracle said that it planned to “retain over 90 percent of PeopleSoft product development and product support staff.” Oracle went on to note in the press release that the “PeopleSoft development team will finish the development and deployment of PeopleSoft version 8.9, and then begin development of the next upgrade to PeopleSoft products, version 9.0.”

Oracle expected to deliver most of the layoff notices to the affected employees during the past weekend, according to the Associated Press. Several people close to Oracle said employees would learn if they are out of a job when overnight packages are delivered to their homes Saturday, according to the report.