Sun Microsystems to cut 6,000 jobs
California based Sun Microsystems yesterday announced that it was shedding 6,000 jobs, in a move that Jonathan Schwartz, CEO of Sun, said was designed to “align Sun’s business with global economic realities.”
The move will shrink Sun’s workforce by 15-18%, according to a press release published by the company.
Sun have also stated that US$ 700 to $800 million dollars per year should be saved by the move, which will cost $500 to $600 million to implement over the next twelve months.
Rick Hanna, an equity analyst for Morningstar Inc, commented on the move. “They still have strong cash on the balance sheet, and they’re still generating free cash flow, so they’re not dead yet, but the patient is definitely on the respirator,” he said.. “I can’t imagine for a second the board would be satisfied with Sun’s current performance. . . . What’s happening with Sun at this point is figuring out how to maximize what’s left.”
Sun also announced yesterday that it will “accelerate our delivery of key open source platform innovations.”
PRIMARY SOURCE:
SANTA CLARA, CA November 14, 2008 Sun Microsystems, Inc. (NASDAQ: JAVA) today announced a series of changes designed to align its cost model with the global economic climate and accelerate the introduction of compelling open source innovations. As part of this effort, Sun is announcing a global workforce reduction and alignment of its Software organization into new business groups – Application Platform Software, Systems Platforms, and Cloud Computing & Developer Platforms – with a focus on boosting open source momentum and growing new sectors of the market who view technology as a competitive weapon.
“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 – from MySQL to Sun’s latest Open Storage offerings,” said Jonathan Schwartz, CEO, Sun Microsystems.
Improving Cost Structure
As part of today’s actions, Sun’s Board of Directors has approved a restructuring plan aimed at reducing costs by approximately $700 to $800 million annually. The plan includes a reduction of approximately 5,000 to 6,000 employees, representing approximately 15% to 18% of the Company’s global workforce. Sun expects to incur total charges in the range of $500 to $600 million over the next twelve months in connection with the plan, of which it expects to incur approximately $375 to $450 million within its current fiscal year 2009. Sun expects to begin realizing cost savings in the third quarter of the Company’s fiscal year 2009, and expects to realize a substantial portion of the run rate benefit by the first quarter of the next fiscal year.
Streamlining for Growth
Sun’s new organizational alignment is a recognition of the comprehensive role software plays in the Company’s growth strategy. Sun creates the best platforms on which to develop applications (Application Platform Software), the best platforms to run those applications (Systems Platforms) and is taking the next step to enabling infrastructure as a service through ‘cloud platforms’ (Cloud Computing & Developer Platforms).
Sun’s new software alignments include the formation of two new business groups and a new group within Sun’s existing Systems business:
* Application Platform Software: Executive Vice President, Anil Gadre, will move from his position as Chief Marketing Officer to lead this newly formed group. Charged with creating the highest value modern software business in the industry, the unit will build on Sun’s open source leadership position to capitalize on the global market’s demand for open application platforms for everything from databases to business integration services on servers, desktops and handheld devices. This includes the entirety of Sun’s Java technology franchise, MySQL open source database products, as well as Software Infrastructure including the widely adopted GlassFish Application Server and leading Identity management products. This group will also include the Sun Learning Services organization.
* Systems Platforms: Under the leadership of Executive Vice President, John Fowler, Sun’s Solaris, Virtualization (including xVM and VirtualBox), and Systems Management Software teams join the Systems organization to deliver highly differentiated and optimized computing, storage and networking systems. Unlike any other technology provider on earth, Sun will be uniquely positioned to leverage its open OS leadership and virtualization portfolio to create durable competitive advantage for Sun’s systems business, and category-shifting innovations for customers. The recently announced 7000-series of Open Storage products, leveraging open source ZFS technology, DTrace analytics, superior management capability, and unique storage engineering are only the beginning of this deep systems roadmap.
* Cloud Computing & Developer Platforms: Working across all of Sun, Senior Vice President, Dave Douglas, will lead the Company’s efforts to capitalize on two trends: the increasing shift of customer and developer focus to web-based cloud services and Sun’s already established leadership position in the space through Network.com, the NetBeans developer platform, and the StarOffice portfolio. The unit will build upon Sun’s existing online developer community – one of the world’s largest – to firmly establish the company as a leader in cloud computing and grow this area into a significant driver of future revenues.In addition, Sun is also aligning its marketing function to more effectively support its sales and product organizations. Product and technology marketing will now be integrated directly into the product groups with field and partner marketing moving under Peter Ryan, Executive Vice President of Global Sales and Services. Corporate Marketing will be led by newly appointed Senior Vice President, Ingrid Van Den Hoogen, who also joins Sun’s Executive Leadership Team, reporting to the CEO.
Sun also announced today that Rich Green, Executive Vice President of Software, has chosen to leave the Company. Green has been an instrumental force in evolving Sun’s Software strategy and successful business execution across its diverse portfolio. All executive appointments and changes are effective immediately. Please visit http://www.sun.com/aboutsun/media/ceo/index.jsp.
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