Arik Hesseldahl

Recent Posts by Arik Hesseldahl

Oracle: That’s Mister Job Creator to You, Senator

Software giant Oracle is in a public policy spat with Carl Levin, the Democratic senator from Michigan, over whether or not it has been a net job creator or job destroyer since 2004.

At issue is the idea of a tax repatriation holiday. Cash-rich companies, many of them tech companies, have billions stashed in overseas accounts waiting for a tax-advantageous moment to bring them back to the States. Companies like Intel and Cisco Systems and, yes, Oracle have been arguing that the government should do what it did in 2004 and give them a tax holiday that would allow them to bring these funds home, the theory being that it would amount to a privately funded stimulus.

The problem is there’s a big debate over what effect, precisely, the 2004 tax holiday had. As reported by The Wall Street Journal today, Levin, who doesn’t favor it, argued in a report released today (embedded below) that the effect wasn’t as good on the jobs front as many companies would like you to believe.

The interpretation is over how and under what circumstances Oracle’s payroll grew. Oracle has spent tens of billions of dollars acquiring companies like PeopleSoft and Sun Microsystems. Naturally, acquisitions add to a company’s payroll, but there are often job eliminations, too, as duplicated positions get eliminated.

Levin pointed out that in the case of two 2005 acquisitions — Retek and PeopleSoft — Oracle added fewer jobs to its overall headcount than there were employees of both companies, and so eliminated more jobs in the wake of the 2004 tax holiday than it created.

“Prior to being acquired by Oracle in 2005, Retek reported in its SEC filings that it had 531 worldwide jobs, while PeopleSoft reported that it had 8,748 employees in the United States. Oracle informed the Subcommittee that, in 2005, it increased its U.S. workforce by 4,440 jobs over the prior year. That 4,440 total, which reflects less than half the number of jobs brought to Oracle by Retek and PeopleSoft, indicates that, after acquiring the two companies, Oracle actually eliminated thousands of jobs previously held by U.S. workers.”

Oracle has since shot back in a statement from Senior Vice President Ken Glueck, citing the growth of its overall workforce since 2004 and in its research and development budget, which as of Oracle’s fiscal 2011 had more than tripled to $4.5 billion from $1.3 billion in 2004. And as of the quarter ended Aug. 31, it had more than $31 billion in combined cash and short-term investments, much of it held in non-U.S. accounts, that it would like to bring back to U.S. shores without having to pay an 8.75 percent repatriation tax.

“Between 2004 and today Oracle has grown its workforce from 42,000 to over 105,000 employees and we are hiring aggressively right now. Oracle spends well over $4 billion per year investing in research and development to fuel further growth. The only news in Senator Levin’s results-oriented ‘study’ is that he still opposes repatriation. With unemployment over 9 percent and more than $1 trillion dollars waiting to be put to work in the United States one would have thought he would revisit his long-standing opposition.”

levinstudy


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