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EMC Says Oracle-Sun Deal is a Game Changer, Asks For Salary Reductions

EMC’s (NYSE:EMC) CEO says Oracle’s bid to buy Sun Microsystems will be a game changer in the data center market, and has asked employees to take a 5 percent pay cut as the vendor struggles with lower demand for its storage products. Earlier this week, Oracle Corp. made a surprise proposal to acquire Sun Microsystems […]

Written By: Sharon Linsenbach

Apr 23, 2009

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EMC’s (NYSE:EMC) CEO says Oracle’s bid to buy Sun Microsystems will be a game changer in the data center market, and has asked employees to take a 5 percent pay cut as the vendor struggles with lower demand for its storage products.

Earlier this week, Oracle Corp. made a surprise proposal to acquire Sun Microsystems after bid by IBM failed. EMC CEO Joseph Tucci said the proposed acquisition "raises the stakes" in the battle for control of the corporate data center market.

"It will change the game to some degree," Tucci said. Many of Oracle’s customers rely on EMC for their data center storage requirements, he said, though the two technology giants have conflicting views on how to best serve the market.

While EMC is working towards more open standards in an attempt to make its storage systems compatible with most major software providers, Oracle is taking the opposite approach. The software giant wants to supply customers with a full range of proprietary products, from software and database-management products to servers and other hardware.

"It’s the same battle that we’ve been fighting for a while," Tucci said.

In a conference call to discuss EMC’s first-quarter earnings, Tucci said he does not expect EMC will make further layoffs after earlier announcing EMC would let go about 6 percent of its workforce, or about 2,400 employees. EMC did ask that employees agree to a 5 percent salary cut that will help reduce costs as corporate IT spending slows.

The pay cuts wouldn’t apply to workers paid on an hourly basis, and would be in addition to the 5 percent to 20 percent salary cuts already taken by EMC’s senior management, he said.

Tucci said that in the first quarter, EMC’s data storage customers held off on purchases as they struggled to tighten budgets and enact more stringent spending policies. Though Tucci says demand picked up toward the end of the first quarter, he added that expects the market will remain depressed through the second quarter of 2009.

"Customers will continue with their just-enough, just-in-time spending patterns," Tucci said on the conference call.

EMC Says Oracle-Sun Deal is a Game Changer, Asks For Salary Reductions

Sharon Linsenbach

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