updated 2/9/2006 7:59:25 PM ET 2006-02-10T00:59:25

Business software maker Oracle Corp. said Thursday that it will cut about 2,000 jobs, or more than 3 percent of its work force, as it digs for bigger profits from its recent $5.85 billion takeover of Siebel Systems Inc.

Redwood Shores, Calif.-based Oracle inherited 4,700 Siebel workers in the acquisition, but most of the cuts will be concentrated among employees on the company payroll before the deal closed last week, Chief Executive Larry Ellison told analysts during a conference call.

About 90 percent of Siebel’s customer support, engineering and sales staff is being retained, Ellison said.

After the purge is completed, Oracle will employ about 55,000 workers worldwide, according to Safra Catz, Oracle’s chief financial officer. The cost cutting should lower Oracle’s expenses by at least $400 million annually, Catz said.

Oracle already has handed out pink slips to some of the affected employees and expects to complete most of the layoffs during the next few weeks, spokesman Bob Wynne said.

The job cuts fell within the range projected by industry analysts nearly five months ago when Oracle first announced plans to buy Siebel, a once-bitter rival that had been mired in a deep sales slump.

Besides providing details about the reduction, Oracle also lowered its profit projections for the rest of its fiscal year. Excluding acquisition charges and other expenses unrelated to its continuing business, Oracle expects to earn 18 cents per share during the current quarter, a penny below the average estimate among analysts surveyed by Thomson Financial.

In the following quarter, Oracle expects to earn 26 cents per share, excluding certain expenses, also a penny below analyst estimates.

This marks Oracle’s second major shake-up in a little over a year. Shortly after completing an $11.1 billion acquisition of PeopleSoft Inc., Oracle laid off 5,000 employees, including a chunk of its own work force.

Oracle has spent nearly $20 billion on acquisitions during the past 14 months in a bid to lure customers away from Germany-based SAP, the leading maker of software that enables companies to automate a wide range of administrative tasks.

The expansion so far has created a much larger company worth less than when the expansion began. Oracle’s market value has declined by about $4 billion since the end of 2004.

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