Sun Flames 6,000 Workers in Cost-Cutting Bid

By Lawrence Walsh  |  Print this article Print

The recession is taking a toll on the high-end IT hardware and software vendor. It will save more than $700 million with the downsizing.

Sun Microsystems announced this morning that it will lay off as many as 6,000 workers and realign its software division--which includes the widely used Java platform--in an effort to stem costs amid the economic downturn.

Sun recently announced a $1.68 billion loss for the third quarter ending Sept. 30. It was a huge reversal from the same period in 2007, when the high-end hardware and software vendor reported $89 million profit.

Jonathan Schwartz
CEO, Sun Microsystems

Home to Java, MySQL and the Solaris operating system, Sun was rebounding in recent years under the leadership of Jonathan Schwartz. In 2006, the company reorganized under four primary business units: storage, software, servers and security. Green and energy efficient computing has been a particular emphasis, as the company has debuted hardware with better power and cooling designs.

Survey: Good Tech and Sales
Help is Hard to Find

The real business driver behind Sun has been fueling the Web 2.0 world. Sun bet that the Web 2.0 world would need high-end servers and storage to enable effiencent and feature-rich cloud-based applications.

The company says that falling demand for high-end hardware is behind its losses and forcing budget and staffing cuts. The layoffs, which will eliminate as much as 18 percent of Sun's workforce, will save the company $700 million to $800 million. The company will incur a charge of as much as $500 million as a result of the layoffs and restructuring its software division.

The effect of the layoffs and restructuring on the Sun channel, which numbers more than 3,000 partners in North America, were unclear as of this report.


Lawrence Walsh Lawrence Walsh is editor of Baseline magazine, overseeing print and online editorial content and the strategic direction of the publication. He is also a regular columnist for Ziff Davis Enterprise's Channel Insider. Mr. Walsh is well versed in IT technology and issues, and he is an expert in IT security technologies and policies, managed services, business intelligence software and IT reseller channels. An award-winning journalist, Mr. Walsh has served as editor of CMP Technology's VARBusiness and GovernmentVAR magazines, and TechTarget's Information Security magazine. He has written hundreds of articles, analyses and commentaries on the development of reseller businesses, the IT marketplace and managed services, as well as information security policy, strategy and technology. Prior to his magazine career, Mr. Walsh was a newspaper editor and reporter, having held editorial positions at the Boston Globe, MetroWest Daily News, Brockton Enterprise and Community Newspaper Company.

Submit a Comment

Loading Comments...