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By Dawn Kawamoto, 9 February 2006 08:50

NEWS

With the mega-merger between Oracle and Siebel Systems closed, Wall Street analysts are forecasting pink slips for Siebel employees.

But Siebel, a large vendor of customer relationship management (CRM) software, may not be the only one to feel the pain. Analysts have noted that Oracle employees involved with its own CRM efforts may find themselves displaced.

Oracle on Thursday plans to discuss its integration path and business outlook for the combined companies, during a conference call with analysts.

Siebel, which recently closed its $5.85bn merger with Oracle, may find 60 per cent of its 4,686 employees cut, UBS analyst Heather Bellini predicted in a research note. That forecast is based on an assumption that the Siebel merger will add 2 to 3 cents to Oracle's profits within the next 12 months, she noted.

Other analysts - including WR Hambrecht's Robert Stimson and Sanford Berstein's Charles Di Bona - also anticipate layoffs.

Di Bona said: "Oracle said it wanted to cut costs by a couple [of] hundred million when it announced the deal. I would imagine it will come from a mix of the two companies but more heavily weighted toward Oracle."

Oracle has previously indicated it plans to use Siebel's technology as its core CRM product and, as a result, Oracle's CRM sales and marketing team may feel the deepest cuts, Di Bona noted.

Administrative Siebel employees, such as those in finance and human resources, are likely to encounter the heaviest cuts, he added.

Stimson, meanwhile, predicted in his research note that he anticipates Oracle to "immediately execute a round of layoffs" in Siebel's administrative and back office areas.

Stimson said in his research note: "We estimate that Oracle will have to cut Siebel's operating costs by approximately... $350m to $400m in order to meet its previously stated accretion goals."

During the first nine months of Siebel's fiscal year, general and administrative expenses reached $76m and sales and marketing reached $270.9m. The company's product development area generated operating expenses of $211.9m in the nine months ended 30 September, according to Siebel's quarterly filing with the Securities and Exchange Commission.

WR Hambrecht's Stimson not only anticipated layoffs in the Siebel camp but also among employees of the former PeopleSoft and JD Edwards companies, two enterprise applications vendors that Oracle acquired last year.

He said in his report: "We have been hearing that further headcount reductions among PeopleSoft and JD Edwards employees may occur shortly as the company begins to implement its longer-term vision for Fusion."

Fusion is Oracle's next-generation enterprise applications suite, which is intended to meld the technologies of its previous acquisitions into an integrated package with newly developed technologies.

Oracle declined to comment.

Dawn Kawamoto writes for CNET News.com