Sun to Cut up to 5,000 Jobs

By Chris Preimesberger  |  Posted 2006-05-31 Print this article Print

The moves will save the company up to $590 million, officials say.

Sun Microsystems is cutting up to 13 percent of its workforce as part of a growth plan designed to return the struggling tech giant back to profitability. About 4,000 to 5,000 of Suns global workforce of about 37,500 will lose their jobs as part of a plan announced May 31 by the Santa Clara, Calif., company.
The job cuts will occur over the next six months, according to Sun, which also said it is selling its Newark, Calif., campus and facilities it leases out in Sunnyvale, Calif.
Sun officials expect the moves to save the company between $480 million and $590 million annually, with the savings being realized starting in the fiscal fourth quarter in 2007. They expect to take restructuring charges of $340 million to $500 million over the next several quarters. The moves come as Sun undergoes a number of changes, most importantly Jonathan Schwartz taking over as CEO for Scott McNealy, who held the post for 22 years. Schwartz said his first task is to undertake a complete review of the companys operations and make moves designed to bring the company back to financial health. Industry observers for years have called for Sun to pare back its workforce to more closely match its business climate, and said they hoped Schwartz would make the difficult decisions that McNealy declined to do. However, one analyst said that while job cuts were needed, the number may give people pause. "The sheer size of the number of layoffs may blow a big hole in the fantasy some might have heard [about Suns financial health]," said Charles King, an analyst with Pund-IT Research, in Hayward, Calif. "You dont ax 4,000 to 5,000 people unless youve got some serious problems." With a new CEO in place, some reorganization is to be expected, King said. Sun now has to make sure that it doesnt cut too deeply in its engineering ranks, which could hurt the companys efforts to remake itself. Next Page: Moving in the right direction.

Chris Preimesberger Chris Preimesberger was named Editor-in-Chief of Features & Analysis at eWEEK in November 2011. Previously he served eWEEK as Senior Writer, covering a range of IT sectors that include data center systems, cloud computing, storage, virtualization, green IT, e-discovery and IT governance. His blog, Storage Station, is considered a go-to information source. Chris won a national Folio Award for magazine writing in November 2011 for a cover story on and CEO-founder Marc Benioff, and he has served as a judge for the SIIA Codie Awards since 2005. In previous IT journalism, Chris was a founding editor of both IT Manager's Journal and and was managing editor of Software Development magazine. His diverse resume also includes: sportswriter for the Los Angeles Daily News, covering NCAA and NBA basketball, television critic for the Palo Alto Times Tribune, and Sports Information Director at Stanford University. He has served as a correspondent for The Associated Press, covering Stanford and NCAA tournament basketball, since 1983. He has covered a number of major events, including the 1984 Democratic National Convention, a Presidential press conference at the White House in 1993, the Emmy Awards (three times), two Rose Bowls, the Fiesta Bowl, several NCAA men's and women's basketball tournaments, a Formula One Grand Prix auto race, a heavyweight boxing championship bout (Ali vs. Spinks, 1978), and the 1985 Super Bowl. A 1975 graduate of Pepperdine University in Malibu, Calif., Chris has won more than a dozen regional and national awards for his work. He and his wife, Rebecca, have four children and reside in Redwood City, Calif.Follow on Twitter: editingwhiz

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