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Series of Layoffs Begin at PeopleSoft

Times Staff Writer

Oracle Corp. began laying off thousands of former PeopleSoft Inc. employees Friday, launching an unusually long and painful process that some observers likened to ritual humiliation.

The database software giant, which won a bitter 18-month battle to acquire PeopleSoft this month, said 5,000 jobs would be eliminated at both companies combined, a number in line with expectations. Oracle executives offered few specifics but previously have said that most of the cuts would come on the PeopleSoft side.

Oracle created more uncertainty for PeopleSoft veterans by noting in an afternoon statement that although some employees would learn their fate Friday, many others would hear over the next 10 days -- or even later. More commonly at big businesses, layoffs occur on a single day.

A 10-day layoff period “is just leaving the organization to go over it and over it, like a recurring nightmare,” said outplacement expert John Challenger of Challenger, Gray & Christmas Inc. “Especially in a situation where there was such antagonism between the leaders, this almost seems vindictive.”

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Some employees said they were told to expect a package to arrive at their homes Saturday, containing either a new job contract or a still-undisclosed severance package.

“The communication has been very poor,” said Anil Aggarwal, PeopleSoft’s director of database marketing, who has been at the company for eight years. “They should have anticipated how people would react. How many people will sleep tonight?”

Workers on Friday left flowers and personal effects around the PeopleSoft sign at headquarters in Pleasanton, Calif., paying respects as if to a departed loved one. Many were overcome with emotion.

“I’m 51. I’ve worked on three continents. I’ve never felt like this,” Aggarwal said. “We’ll find some job, but PeopleSoft truly was a special place.”

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Redwood City, Calif.-based Oracle’s hostile pursuit of PeopleSoft, a direct rival in making business software, included several lawsuits and accusations of unethical behavior by both companies. Oracle Chief Executive Larry Ellison joked about shooting then-PeopleSoft CEO Craig Conway, a former trusted lieutenant.

The companies also were worlds apart in culture.

Ellison leads a bare-knuckled and sales-driven environment, bragging about his policy of firing the least effective 10% of employees every year. PeopleSoft’s beloved founder Dave Duffield, who briefly returned as CEO after the fray cost Conway his job, signed his companywide memos “Dad.”

In recent days, Oracle has left no doubt which culture would triumph. Employees at PeopleSoft’s headquarters, southeast of Oakland, reported being formally grilled on their job functions before being told that they would be informed of their futures in due course.

Oracle spent $10.3 billion in cash for PeopleSoft, promising its shareholders that adding PeopleSoft customers would bring greater profit. Oracle stock, which closed at $13.63 on Nasdaq on Friday, gained a few cents in after-hours trading after the layoff announcement.

As rumors flew, employees fretted.

“I have engineer types come in and say they’re safe, then someone else comes in and says the engineers aren’t,” said Otis Nostrand, who owns a popular restaurant near PeopleSoft’s headquarters. “No one really knows, and that’s generated a lot of anxiety. It’s driven up my beer sales.”

Oracle’s statement Friday included a pledge that it planned to keep more than 90% of those who develop and maintain PeopleSoft products. That appeared to leave sales, marketing, administration and other employees at greater risk.

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The company declined to answer any questions on the process before a Tuesday meeting with the press and customers.

The 5,000 target may be the largest announced firing by a California firm in nearly two years. It rivals the big cuts by technology companies in 2000 and 2001, although those reductions came at companies in far worse straits.

Some PeopleSoft employees have decided not to wait, sending out resumes and even quitting without new jobs; Microsoft Corp. and other big software companies have already begun recruiting PeopleSoft workers.

PeopleSoft had 3,500 of its 11,000 workers in Pleasanton; it was the largest employer in the city of 64,000.

“Some businesses have depended very heavily on PeopleSoft,” said Nostrand, a former president of the Pleasanton Chamber of Commerce.

Five thousand jobs is a small number compared with the 450,000 lost in the Bay Area since the market peaked in 2000, economists said. But because even companies that are rebounding aren’t hiring much, many PeopleSoft and Oracle workers will have to move away, experts say.

“They might be able to bump some other people, but then those people will have to move. It’s musical chairs,” said Stephen Levy, director of the Center for Continuing Study of the California Economy in Palo Alto. “The technology economy, on the jobs side, is not growing.”

Ellison and other executives have predicted a round of consolidation at technology companies, and a wave of other mergers has already begun. If current trends hold, many other workers in and around Silicon Valley may discover that surviving the dot-com bust may not have been enough.

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But at least in most combined companies, Challenger said, the employees kept on will be made to feel welcome.


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