The reductions affected Sybase workers in all departments worldwide and reduced the workforce by 8 percent to about 4,500 people, spokeswoman Mary Shank-Rockman said today. The struggling database manufacturer previously had cut 600 jobs last spring.
The latest reduction stems from a new strategy announced a year ago, after the company suffered a fourth-quarter loss of $25.5 million. In December, Sybase was split into four divisions--mobile computing, Internet applications, enterprise computing, and business intelligence--to take advantage of new markets that are growing faster than the database business.
"We've been focusing efforts in the last couple of months on a new growth strategy by putting in place the new divisions and eliminating duplications of effort," she said.
The job cuts drew mixed reactions among financial analysts. Gary Abbott, vice president of Punk, Ziegel in New York, said the database company needed to cut costs to help with its bottom line as it focuses on its new markets.
"Sybase has been in a turnaround situation for a few years now. The company has believed it has a significant growing business, but the investor criticism has been 'too little, too late' in the cost-cutting side," he said. "This fourth quarter, they've been more pro-active, than reactive. In creating new divisions in their business, they found some additional expenses that could be taken out. Starting off [the new year] with a lean expense base is a good move."
Abbott said the workforce reduction is the last part of Sybase's reorganization and expects the company to be profitable throughout this year. Abbott expects Sybase to report profits of 6 cents per share when it announces fourth-quarter earnings January 21.
In the third quarter, the company reported profits of 3 cents per share on revenue of $210 million, compared with profits of 8 cents per share on revenue of $233 million during the year-ago quarter.
Analyst Jim Pickrel, of investment banking house Hambrecht & Quist in San Francisco is less optimistic, saying he expects the company will have flat revenue growth in 1999.
"They need to get more profitable to survive, but they're in a bit of spiral where their revenues are going down," he said. "It's hard to grow revenue when you're in layoff mode."
Pickrel said he's not convinced the new markets Sybase is going after will be highly profitable, especially because its main competitors, such as Oracle, are focusing on the same markets.