Sun Announces Layoffs Amid Poor Revenue Outlook

Sun Microsystems announced plans to cut its global workforce by approximately nine percent during a conference call it held Friday to discuss its first-quarter earnings. Scott McNealy, Sun's Chairman and CEO, pointed to a soft economy and the terrorist attacks on the United States as the primary reasons for the cuts.

“The computer industry is continuing to consolidate and downsize itself,” said McNealy during the call. “In addition, the events of September 11 have impacted us all. Things were tough with the economy before, but now we are facing increasing uncertainties both in the US and globally."

Based on preliminary data, Sun believes revenue for its first quarter ended September 30 will fall in the range of $2.7 billion and $2.9 billion, far below the $3.7 billion target it set prior to the quarter. Sun’s per share loss for the quarter is expected to be between 5 cents and 7 cents, worse than analyst predictions of an earnings-per-share loss of 4 cents.

In addition to reducing the size of its workforce, Sun said it will also look for opportunities to consolidate its facilities as it tries to quickly move back to profitability. Between the layoffs and office closures, Sun will be taking a $500 million charge in the second quarter.

McNealy cited the Sun Open Net Environment as one of the company’s lone bright spots and said Sun will continue expanding and building on top of the platform into the future. He also highlighted last week’s introduction of the Sun Fire 15K high-end server as major coup, and said Sun will continue to develop higher performing UltraSPARC III chip sets throughout its product line.

About the Author

Matt Migliore is regular contributor to ENTmag.com. He focuses particularly on Microsoft .NET and other Web services technologies. Matt was the editor of several technology-related Web publications and electronic newsletters, including Web Services Report, ASP insights and MIDRANGE Systems.