Posted on 05/31/2006 6:15:45 PM PDT by advance_copy
SAN FRANCISCO -- Computer server maker Sun Microsystems Inc., whose revenue has declined four years in a row, said Wednesday it planned to cut 4,000 to 5,000 jobs in an effort to return to consistent profitability.
The cuts, which will reduce Sun's 37,500-person work force by 11 percent to 13 percent over the next six months, will cost Santa Clara-based Sun from $340 million to $500 million over the next several quarters, the company said.
Sun executives expect the plan, which also includes selling real estate and exiting leases, to save the company from $480 million to $590 million, once it is fully implemented sometime around June of next year.
The company, a major supplier of computer servers that run corporate networks and Web sites, was once a Wall Street darling but has struggled since the dot-com bubble burst in late 2000. Servers that run processors based on Intel Corp. designs and Microsoft Corp.'s Windows or the free Linux operating systems have grown increasingly powerful, often performing the same jobs at a fraction of the cost of Sun products.
(Excerpt) Read more at washingtonpost.com ...
Demand for high-end servers just isn't there. And why pay big bucks for a Sun when you only need a few PCs disguised as servers? Sun is selling AMDx64 and x86-based low-end machines now. That stings the pride in a big way.
True innovation in applications, which increases server-cycle demand and accordingly keeps Sun in business, is dying in India, IMHO.
What's going to happen to Java?
Sun is considering opening up Java to open source.
http://news.zdnet.com/2100-9593_22-6072760.html
Nothing. Sun is in no danger of going under. Just about all industries go through a growth cycle where they get too big and have to cut back and get smarter to generate the same returns.
During the mid-1990s, that Wang building was bought for a song and was turned into a multi-purpose office complex.
Sun Microsystems has a huge complex down the road in Burlington, MA. I suspect that other tenants will be moving in there soon.
Hubris anyone?
e.g. SGI?
SGI went through the same kind of growing pains, but unless you know something I don't, Sun isn't in any danger of filing for bankruptcy.
McNutty has about 200 VPs on board; The company is top heavy; he never made any deep cuts himself during the last 5 years of quarter-after-quarter losses; he ran the company like his little fiefdom and said to hell with the shareholders; turned the company over to his pony-tailed clone; this may be too little too late.
I'm still waiting for the Federal and California Governments to cut back and get smart (er)...time for us stockholders to put in a new management team...lean and mean...
Well, don't really have a dog in this fight but hey, it's raining outside and I'm bored. So, here's my two bits; personally I have always thought Scott Mcnealy to be a whinny, spoiled, little techy turd. He was always crying that MS was not playing fair, yada, yada, yada. So, I really don't much care what happens to Sun. Let go under for all I care.
CUT http://www.tradingmarkets.com/tm.site/news/TOP%20STORY/269012/
In addition to the restructuring activities, Sun's board has approved the company's operational goals and priorities for its fiscal 2007 business plan, which includes operating income goals of at least 4% of revenues for fourth quarter of fiscal 2007 and of at least 10% of revenues long-term.
The company also said it expects fiscal 2007 revenue growth in the low-to-middle single digits and a gross margin of around 43%.
In the most recent quarter, the company reported a much wider loss though its revenues grew 21% for the period.
Separately, Sun Microsystems said that its board of directors voted to eliminate the company's shareholder rights plan. The shareholder rights plan was originally scheduled to expire on July 25, 2012.
The new policy provides that the board must obtain stockholder approval prior to adopting a poison pill, unless the board determines that, under the circumstances then existing, it would be in the best interests of the company and its stockholders to adopt a poison pill without prior stockholder approval. But, if a poison pill is adopted by the board without prior stockholder approval, the poison pill must provide that it will expire within one year of adoption unless ratified by stockholders.
The board also amended the company's bylaws to provide that directors will be elected by majority vote in uncontested elections.
Shares of Sun Microsystems closed Wednesday's regular trading session at $4.63, up 8 cents or 1.76% and remained unchanged in after hours trading.
Ain't that the truth. They NEVER seem to cut management positions.
Sun needs to wake up and smell the coffee. Just TRY to buy their AMD64 systems with any kind of discount - you end up in a maze of resellers who have no incentive to cut the price unless you are buying huge quantities. They need to produce scads of their UltraSPARC CPUs and sell them CHEEP in order to grow their customer base; they aren't doing it.
Also kind of hard to get rid of when the going gets tough. There aren't that many employers who would be willing to buy a building complex that large, and to sublease it to many companies would take a very long time.
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