Sybase to cut 600 employees

Last month, Sybase Inc. CEO Mitchell Kertzman said his software company hoped to back into the black by the second quarter. Translation: Become profitable by cutting expenses -- and payroll. On Monday, he kept his word.

Sybase Inc., struggling after a disappointing 1997 in which it lost more than $55 million, Monday disclosed plans to lay off nearly 600 employees -- about 11 percent of its overall workforce -- in a reorganisation designed to return the database vendor to profitability. At the beginning of this month, Sybase had 5,658 employees.

The bulk of the layoffs will occur at the company's offices in Emeryville and Mountain View, Calif., company officials said. Other offices to be downsized include those in Concord and Burlington, Mass., as well as overseas. Officials at the database and tools developer would not be more specific.

Sybase, which develops industrial-strength relational database systems, has been nagged by a string of losses. For the fourth quarter of 1997, the company lost $25.5 million on sales of $223.2 million. In the same quarter of 1996, Sybase posted a profit of $5 million on sales of $267.8 million.

The lackluster results stemmed from a downturn in the database market and about $60 million in improperly booked revenues, Sybase officials said late last month. Kertzman said at the time that the company would be forced to cut costs.

For the past two years, Sybase has faced declining sales of its database software amid heavy competition from rivals Oracle Corp. (ORCL) and Microsoft Corp. (MSFT) Company executives had said they expected revenue to grow again starting this year.

When the company issued its earnings report last month, shares of Sybase climbed despite the disappointing results. Analysts said investors were hoping that the worst was over and all the bad news about Sybase was now out in the open. Indeed, BancAmerica Robertson Stephens recently issued a report describing Sybase as an undervalued stock.

But company executives stress that Sybase is not without prospects. And, they say, the company is beefing up its middleware connectivity by adding new processing capabilities to its Jaguar transaction processing server for the Web.

However, the timing of Sybase's recent restructuring and accompanying losses came just as Oracle was also reporting problems overseas that contributed to a 33 percent decline in earnings during that company's most recent quarter. Taken together, the news fueled a growing perception that relational database makers were now competing in a commodity market that will soon come under increasing pressure from Microsoft Corp.

Contributions from Mark Hammond, PC Week Online, and Reuters

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