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Sunday, February 14, 2010


Today's Silicon Valley business news

Two interesting columns in today's San Jose Mercury News. First, this from Mike Cassidy:
Jonathan Schwartz, former Sun CEO...wrote a note in late January marking the end of Sun and bidding goodbye to Sun workers who wouldn't be moving to Oracle.

"For those that ultimately won't become a part of Oracle," he wrote to employees, "this will be the first step in a new adventure."

It will be an adventure, all right. Maybe more of an adventure than many want. And what are the second and third steps in the new adventure? Food stamps? Foreclosure?
Schwartz, who announced about a week ago that he's leaving Sun/Oracle, will depart with $12.8 million in severance...The company will pay his health insurance premiums for two years...Sun Chairman Scott McNealy [already a gazillionaire] will receive $10 million if he doesn't catch on with Oracle...He'll get health insurance, too.

The typical severance package for those laid off? ... Oracle will give them a maximum of three months of pay and cover a maximum of two months of health insurance, in some cases less.
Then this from Chris O'Brien:
How many job cuts has Hewlett-Packard had over the past decade? ... 75,505.

A closer look at the Compaq and EDS mergers also offers insight into why companies cut jobs after an acquisition. It isn't simply the desire to reduce overlap from the merged work forces, although that can seem compelling. Such deals also allow for attractive accounting terms that reduce the impact that layoffs might otherwise have on profits.

Look at the EDS deal, for instance. Normally, the cost of job cuts comes out of a company's bottom line for the year. But when HP acquired EDS, it counted the job cuts as part of the price of the acquisition. That changed the accounting treatment and allowed HP to deduct the costs from profits over several years.
Let's end with a quote from President Obama:
"I, like most of the American people, don't begrudge people success or wealth. That is part of the free-market system."
As are the abominations described above by Cassidy and O'Brien.

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