Sun Eyes Cost Cuts, HP Said Delaying Raises

The U.S. economic slowdown has hit Silicon Valley as an internal memo at Sun Microsystems detailed cut plans and a newspaper reported Hewlett-Packard had told employees it would delay raises to trim spending.

The developments -- and a cost-saving drive at Microsoft made public this week -- highlight the new emphasis on thrift for technology firms given the slowing economy.

"We will have to adjust. We will have to respond to changing economic situations in our spending and hiring decisions. As the market sorts out its economic uncertainty, we will need to continue the cost controls we put in place this quarter,'' Sun chief executive Scott McNealy said in the memo.

McNealy, who outlined his thoughts on the economy cooling off ''especially in the dotcom environment,'' said Sun was still ''storming the market'' and dismissed rumors that Sun was delaying shipments of UltraSparc III, the micro chip powering a new line of servers.

Separately, the San Jose Mercury News reported that Hewlett-Packard has delayed employee salary raises a by at least three months as a cost-cutting measure.

It quoted sources at the third-largest personal computer as saying the firm aimed to save $100 million to $140 million and had sent a memo on the delay to employees this week.

Dave Berman, spokesman for Hewlett-Packard, declined to comment on the report but said the company was cutting spending.

``We said on Dec. 6 that we were going to try to reduce our costs, bring them more in line with anticipated revenues, and we have communicated that to our employees and are asking them to make some short-term sacrifices in order to avoid some other measures that might have to be taken later,'' he said.

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