Sun Microsystems makes big staff cuts

TEXT OF STORY

SCOTT JAGOW: Up to 5,000 people at Sun Microsystems may have no choice but to clean out their desks. That's because they're getting fired. Marketplace business editor Cheryl Glaser has more.


CHERYL GLASER: Sun Microsystems used to be one of the giants of Silicon Valley. But since the dot-com bust, many companies have given Sun's high-end servers the cold shoulder. They've opted instead for less expensive computers from companies like IBM and Dell.

Now Sun's cooked up a plan to get itself back on track. It calls for simplifying product lines, selling off real estate and cutting up to 5,000 jobs — 13 percent of the workforce.

But Morningstar analyst Mark Lanyon says some folks on Wall Street wanted more.

MARK LANYON: Some analysts have called for job cuts in the range of 10 to 12,000 employees. The argument is that even with 5,000 jobs cuts, they won't be able to be nearly as profitable as the big ugly competitors in the market, such as HP and Dell.

Still, Sun says the changes could save almost $600 million a year. That could go a long way for a company that lost more than $200 million just last quarter.

I'm Cheryl Glaser for Marketplace.

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