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Sun losses mount; to cut 4,400 jobs

In an effort to bring its expenses in line with declining sales and significant deficits, Sun Microsystems executives last week outlined plans to slash its workforce by 11%, or 4,400 workers. The Santa Clara, Calif.-based computer maker currently employs 39,400 workers.

Late last week, Sun said losses for the quarter ended Sept. 29 totaled $111 million, or 4 cents per share, vs. a loss of $180 million, or 6 cents per share, in the same period last year. A year earlier, Sun reported a pro forma loss of $158 million, or 5 cents per share. Analysts were expecting a loss of 4 cents per share on sales of $2.87 billion, according to a survey by Thomson First Call.

Even though Sun posted fiscal Q1 numbers that beat Wall Street expectations, executives conceded that the hoped for rebound in corporate technology spending never materialized during the third quarter.

Sun has been slow to cut jobs, even in a down economy. Sun CEO Scott McNealy has said that he was reluctant to lay off his employees because it is so difficult to replace them when the economy bounces back. With no rebound in sight, the Sun layoffs were widely seen as inevitable.

''Sun has done an outstanding job in maintaining fiscal discipline, but it hasn't been enough to counterbalance revenue shortfalls caused by the protracted economic downturn,'' Steve McGowan, Sun's chief financial officer, told analysts.

About the Author

John K. Waters is a freelance writer based in Silicon Valley. He can be reached at john@watersworks.com.

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