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January 29, 2010

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Oracle's Sun deal to shake up industry

ORACLE Corp Chief Executive Larry Ellison promised on Wednesday to shake up the technology industry with his purchase of Sun Microsystems Inc, a deal that enables the world's No. 3 software maker to enter the hardware business.

Ellison, 65, the brash billionaire who founded Oracle more than 30 years ago, said the US$7.5 billion Sun deal gives Oracle the broadest array of technology products of any company.

"The proof will be in the pudding in the integrated products we deliver to our customers," he told customers and analysts at an event at company headquarters in Redwood City, California, timed to celebrate closing the Sun deal.

The combined company will be able to produce everything that businesses use in their data centers, from semiconductors and operating systems to computer servers, databases and accounting software.

That variety will allow Oracle to develop specialized computers that are more efficient but less expensive than ones made using components sold by rivals such as IBM, Hewlett Packard Co and Dell Inc, company officials said.

Ellison reiterated a promise made back in April, when Oracle agreed to buy Sun, that the deal would add US$1.5 billion of operating profit during its first year.

He played down the need for layoffs, saying Oracle plans to hire 2,000 salespeople to sell Sun's high-end computer servers, storage equipment and other hardware. The hardware maker had sold its computers through outside partners.

Ellison also said Oracle would lay off about half as many people as it hired.

Sun already had job cuts in the works. The company said in October it planed to slash 3,000 jobs, or about 10 percent of its work force, over about a year.

Analysts expect more layoffs now that the deal has been consummated.



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