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January 16, 2005

Larry Ellison - Working Man's Hero

Gotcha.

In my review of In Good Company, I complained that the companies that were most likely to treat their employees like checkers were the ones run by kids. Of course, as Ringling Brothers Barnum & Bailey always reminds us, children can be of any age.

From yesterday's Rocky:

Oracle Corp. Chief Executive Larry Ellison is firing about 5,000 employees after combining Oracle and PeopleSoft Inc., and as many as 600 of those job cuts could come in Denver.

PeopleSoft employees were told Friday they would find out their fate today in an express letter sent to their homes from Oracle.

Oh, that's classy. Complete a hostile takeover of a company, gloat about how the employees don't really have any other options, and then tell them to wait at home, enjoying a nice Friday night meal with their families waiting to find out if they'll have a paycheck in two weeks. Ellison is famous for winning sailing races and infamous for taunting people still out on the course by buzzing them with his plane. It's a shame he couldn't have put a couple of dozen people on that plane to go tell people face-to-face that he was letting them go, and what the company would do to help them.

Gloat? Consider this exchange from a December 13 interview with Neil Cavuto:

CAVUTO: Let me ask you, are you worried that in the months that this battle ensued that you had a bit of a brain drain to deal with, that some of the best and brightest at the company might have already left?

ELLISON: I don`t think so. Keep in mind that Silicon -- this is not the Silicon Valley of the dot-com era. It`s not like there are hundreds and thousands of really wonderful jobs available for engineers in Silicon Valley.

I'm sure that the 12,000 employees at Peoplesoft were looking forward to serving their new boss, Mr. Warmth, but I also seem to recall the Peoplesoft buyout of J.D. Edwards having a little different tone. Maybe those Peoplesoft executives who fought tooth-and-nail to save their company actually did have something more than their own jobs in mind.

In Good to Great, Jim Collins recounts how Colman Mockler fought to save Gillette from Ronald Perelman, The deal would have meant an immediate 44% profit for shareholders, and the company would have been carved up with its own razors and sold for scrap. Sometimes, it's not about today's cash.

Collins also talks about the need to be rigorous, cutting people who won't fit the corporate culture rather than keeping them on, damaging the company, and preventing them from finding a new niche. He uses the example of Wells Fargo's takeover of a more traditional bank whose managers enjoyed more traditional bankers' perks.

I did take a look at some of the relative overhead costs of the two companies, based on their most recent annual financial statements. (Oracle and Peoplesoft) It does turn out that Oracle is running a leaner operation than Peoplesoft. Oracle's SG&A is about 3/4 of Peoplesoft's as a percentage of revenue, not entirely surprising giving Oracle's revenues are about 4 1/2 times larger. So some cutting is probably justified.

I'm sure Ellison believes these cuts are necessary, and businesses have a right to run their operations as they see fit. But there's a reason more and more people are rooting against him.

Posted by joshuasharf at January 16, 2005 10:14 PM | TrackBack
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