The European Union (EU) confirmed that Oracle Corp. President Safra Catz met with EU Competition Commissioner Neelie Kroes for negotiations over the company’s acquisition of Sun, which disclosed in a SEC filing this week that it plans on cutting up to 3,000 jobs due to the delay in the acquisition.

In regards to the meeting between Oracle and the EU, a Bloomberg article by Matthew Newman quotes Kroes spokeman Jonathan Todd as saying, "Kroes expressed her disappointment that Oracle failed to produce, despite repeated requests, either hard evidence that there were no competition problems or a proposal for a remedy to the competition concerns identified by the commission. Kroes reiterated to Catz the commission’s willingness to move quickly towards a decision but underlined that a rapid solution lies in Oracle’s hands."

In September, the European Commission decided to take an in-depth look at Oracle's proposed $7.4 billion acquisition of Sun to ensure the database market remains competitive. The Commission, which is the EU's executive and regulatory branch, set a Jan. 19, 2010 deadline to make the decision on whether to sanction the move or propose some modifications.

The uncertainty of the Oracle-Sun deal has been tough on the two companies. In late September, Oracle CEO Larry Ellison said that Sun is losing about $100 million a month with this delay from the European regulators, and "the longer this takes, the more money Sun is going to lose." Ellison has asserted that Oracle's database competes with Microsoft's SQL Server and IBM's DB2 products, and not with MySQL.

However, the Commission said it was concerned about Oracle, the world's top seller of database software, taking ownership of MySQL, the leading open-source database, which Sun acquired last year.

Sun as an independent company is 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, reported ChannelWeb's Joseph F. Kovar.

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 purchase of Sun.

Despite all of this, the slowdown in Sun's business because of the pending deal is not as bad as it could be. According to Teter, 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. [...read more...]

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