Sun to Lay Off 4,400

Cuts comprise 11 percent of the company's workforce.

Sun Microsystems Inc. on Thursday announced it will cut 4,400 jobs, or about 11 percent of its workforce, after reporting it lost $111 million for the quarter.

Chief Executive Officer Scott McNealy said that while the Santa Clara, Calif., company regretted having to lay off workers, he contended that the layoffs were essentially to assure that Sun can ride out an industry wide downturn in computing spending.

"Tough times require tough decisions and everyone at Sun is dedicated to returning the company to profitability as soon as possible," McNealy said in a statement issued Thursday.

Sun has been one of the companies hardest hit by the downturn in IT spending thats occurred over the last two years, and has posted several money-losing quarters since the dot-com bubble burst in 2000.

For its fiscal first quarter, Sun again posted another sales decline as revenues totaled $2.7 billion, or about 4 percent less than it garnered for the same period a year ago. Overall, Sun posted a net loss of $628 million for its last fiscal year.

Amid declining demand for its Unix-based servers—particularly its high-end servers that sell for up to $10 million a piece—Sun has been forced to repeatedly lay off workers and rein in operating expenses. The upcoming job cuts, which the company plans to complete within the next quarter, follow 4,000 layoffs it announced last year.

Citing continued weakness in the U.S. economy and tight IT spending, Sun predicted it wouldnt return to profitability until the second half of 2003.