Sun reorganizes, cuts up to 18 percent of workforce

Sun is laying off 15 percent to 18 percent of its employees as part of a restructuring plan aimed at saving $700 million to $800 million a year.

Sun is laying off 15 percent to 18 percent of its employees as part of a restructuring plan aimed at saving $700 million to $800 million a year, and its top software executive is leaving the company, Sun said Friday.

The cuts will affect between 5,000 and 6,000 employees. Sun is also reorganizing its software division, a move it said stands as "a recognition of the comprehensive role software plays in the company's growth strategy."

In addition, Sun said that Rich Green, the company's executive vice president of software, has decided to leave the company. Sun said Green "has been an instrumental force in evolving Sun's Software strategy and successful business execution across its diverse portfolio."

Sun's software division changes include a new group, Application Platform Software, which includes Sun's MySQL database and infrastructure technology like the GlassFish application server.

The Cloud Computing & Developer Platforms group will focus on Web-based services as well as Sun's NetBeans development platform. Also, Sun's Solaris, virtualization and system management software teams will be moved into the company's systems group.

All changes are effective immediately, Sun said.

Sun said the economy sparked the changes.

"Today, we have taken decisive actions to align Sun's business with global economic realities and accelerate our delivery of key open source platform innovations," CEO Jonathan Schwartz said in a statement.

At the end of October, Sun blamed the downturn in the financial sector for a $1.68 billion quarterly loss. The collapse of Wall Street over the last two months eliminated several key Sun customers.

Sun has also been struggling overall for some time due to slumping sales of its high-end servers.

Angry Sun shareholders have been pressing company officials to improve its performance. Sun's share price has fallen from about $17 at the beginning of this year to roughly $4 at the start of trading Friday.

"The fact that the stock has been diving and diving and diving and is never pulling out of this dive, you start to wonder -- how long can you keep diving before you lose all your stockholders?"one shareholder said during the company's recent shareholder meeting. "How long can you be in freefall and still survive?"

Schwartz told the crowd that Sun is trying to reinvent itself by developing new server systems and attracting new customers with its open-source software portfolio. But that strategy has not borne fruit quickly.

To that end, the scale of Sun's layoffs was not out of line, said Stephen O'Grady, an analyst with Redmonk. "Yes, these are pretty deep cuts, but they're dictated by the company's performance over the past few quarters."

Regardless of Sun's finances, assets like MySQL and GlassFish are valuable assets, and "will survive in one incarnation or another," O'Grady added.

But its sales execution has not matched the quality of its portfolio, said another Redmonk analyst, James Governor, via e-mail.

Part of the problem is that Sun's success "is still overly wedded to the financial services market, a market that has literally gone off a cliff," Governor said. But the company has recently gained some major deals in the media market, he added.

"I actually thought Sun was more likely to go private than make a round of cuts, but there isn't exactly a lot of paper flying around at the moment to fund such a deal," Governor said.

Neither analyst knew exactly what prompted Green's departure, but Governor said he was "a little surprised. ... [Green] was very much Jonathan Schwartz's hire."

Sun shares stood at $4.05 in early trading, down slightly from its previous close of US$4.08. But the Morgan Stanley high technology index fell about 3.7 percent.

(Additional reporting by Marc Ferranti and James Niccolai)

Join the PC World newsletter!

Error: Please check your email address.

Tags job cutsSun Microsystems

Our Back to Business guide highlights the best products for you to boost your productivity at home, on the road, at the office, or in the classroom.

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Chris Kanaracus

IDG News Service
Show Comments

Essentials

Lexar® JumpDrive® S57 USB 3.0 flash drive

Learn more >

Microsoft L5V-00027 Sculpt Ergonomic Keyboard Desktop

Learn more >

Mobile

Lexar® JumpDrive® S45 USB 3.0 flash drive 

Learn more >

Exec

Lexar® Professional 1800x microSDHC™/microSDXC™ UHS-II cards 

Learn more >

Audio-Technica ATH-ANC70 Noise Cancelling Headphones

Learn more >

Lexar® JumpDrive® C20c USB Type-C flash drive 

Learn more >

HD Pan/Tilt Wi-Fi Camera with Night Vision NC450

Learn more >

Budget

Back To Business Guide

Click for more ›

Most Popular Reviews

Latest News Articles

Resources

PCW Evaluation Team

Azadeh Williams

HP OfficeJet Pro 8730

A smarter way to print for busy small business owners, combining speedy printing with scanning and copying, making it easier to produce high quality documents and images at a touch of a button.

Andrew Grant

HP OfficeJet Pro 8730

I've had a multifunction printer in the office going on 10 years now. It was a neat bit of kit back in the day -- print, copy, scan, fax -- when printing over WiFi felt a bit like magic. It’s seen better days though and an upgrade’s well overdue. This HP OfficeJet Pro 8730 looks like it ticks all the same boxes: print, copy, scan, and fax. (Really? Does anyone fax anything any more? I guess it's good to know the facility’s there, just in case.) Printing over WiFi is more-or- less standard these days.

Ed Dawson

HP OfficeJet Pro 8730

As a freelance writer who is always on the go, I like my technology to be both efficient and effective so I can do my job well. The HP OfficeJet Pro 8730 Inkjet Printer ticks all the boxes in terms of form factor, performance and user interface.

Michael Hargreaves

Windows 10 for Business / Dell XPS 13

I’d happily recommend this touchscreen laptop and Windows 10 as a great way to get serious work done at a desk or on the road.

Aysha Strobbe

Windows 10 / HP Spectre x360

Ultimately, I think the Windows 10 environment is excellent for me as it caters for so many different uses. The inclusion of the Xbox app is also great for when you need some downtime too!

Mark Escubio

Windows 10 / Lenovo Yoga 910

For me, the Xbox Play Anywhere is a great new feature as it allows you to play your current Xbox games with higher resolutions and better graphics without forking out extra cash for another copy. Although available titles are still scarce, but I’m sure it will grow in time.

Featured Content

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?