Updated from 12:44 PM ET

Oracle

(ORCL) - Get Report

on Tuesday confirmed what many on Wall Street

had been expecting since last week, when the software giant reported soft numbers for its fiscal third quarter: The layoffs are coming.

"Based on current business conditions, at this time the company expects to reduce our worldwide workforce by approximately 1% to 2% through normal attrition and regular business performance assessments, in line with our ongoing global e-business process improvements," Oracle said in a statement issued to

TheStreet.com

on Tuesday.

The company had 43,308 employees at the end of its February quarter, so that means to 433 to 866 employees will be let go. Analysts were expecting the company to reduce its workforce by as much as 5%, or more than 2,150 people.

A spokeswoman would not confirm when the layoffs would occur, or if they already have taken place. In recent trading, Oracle shares were up 38 cents, or 2.4%, at $15.81.

On a percentage basis, the job cuts are much smaller than those made by other tech bellwethers. For instance,

Compaq

(CPQ)

recently said it would cut 7% of its workforce, while

Cisco

(CSCO) - Get Report

is reducing its headcount by 15%.

Jon Ekoniak, an analyst at

U.S. Bancorp Piper Jaffray

, says it's critical for Oracle to keep an eye on spending.

"They said last quarter that their headcount increased by 3%, due to lower-than-expected turnover," says Ekoniak. "With lower revenues going forward, they need to keep their costs tight." (Ekoniak has a neutral rating on Oracle, and his firm hasn't done underwriting for the company.)

Oracle CEO Larry Ellison has been on a cost-cutting crusade for the last two years, boasting that the company's own software helped it save $1 billion in one year.

Ekoniak said that given the relatively small scale of the layoffs, more cuts, or at least less new hiring, could still be in store at Oracle. And just like with its

earnings warning , as Oracle goes, so goes the software industry. "Overall, I wouldn't be surprised if we saw more layoffs at other software companies, too," Ekoniak says.

But he added that many software companies, such as

PeopleSoft

(PSFT)

, already trimmed their ranks in recent years.

"I think a lot of other software companies are in a similar situation to Oracle, where if they did do layoffs, it would probably be fairly minimal."