Oracle to Lay Off Up to 800 Employees

Oracle Corp., the third-biggest software maker, plans to lay off up to 800 employees to cut costs by reducing duplicate positions in consulting and sales.

The company has about 42,000 employees, spokeswoman Jennifer Glass said. Oracle will trim 1% to 2% of its global staff in the beginning of the year, the Redwood City, Calif.-based company said.

Oracle has been trying to pare costs through job cuts and automating business with its own software. Chief Executive Larry Ellison this month said he wants to widen Oracle’s operating margin, a measure of profitability, to 50% from 35%.

Boosting software sales and decreasing consulting is one way to do that because selling software is more profitable, one analyst said.

“It’s part of a plan to shrink down the services relative to the [software] license portion of the business,” said Richard Davis, an analyst at Needham & Co. “With the mix of revenues they have now, it would be extremely difficult to get to a 50% margin.”

Oracle shares rose 7 cents to $14.06 on Nasdaq.

The company’s services business, which includes technical support and consulting, made up 65% of Oracle’s $2.36 billion in sales for the quarter ended in November. Software license revenue contributed 35%.

Oracle has had three quarters of year-over-year revenue declines, led by a drop in sales of new software licenses. Oracle benefited from sales to Internet companies in 1999 and 2000 and has been hurt as dot-coms shut down this year. Customers complained that its applications, used for tasks such as accounting and tracking inventory, had too many bugs.