Sun Slashing 11% of Jobs

By Michael Singer

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Sun Microsystems Thursday said it would begin to hand out pink slips to 11 percent or 4,334 of its employees, consultants and contractors as a result of a slump in the tech economy.

Back in October 2001 Sun cut 9 percent or 4,400 jobs - its first major layoffs since the company was formed.

"A 20 percent workforce reduction is a tough decision," said Sun CEO Scott McNealy. "Some people said we should have done more or less last year, but I think we are doing this in a reasonable and responsible way."

Sun CFO Steve McGowan said the U.S. employees would be notified of their jobs within the next month. Overseas employees could be cut as late as next summer.

The Palo Alto, Calif.-based networking giant also said consolidate and eliminate excess office space, which will force them to spend approximately $300 million next quarter.McGowan said Sun should be profitable in June of 2003.

The company is also facing technological challenges, such as rising competition from Microsoft Windows and the freely developed Linux operating environments. Sun has embraced Linux, although many analysts still question its commitment and the financial consequences.

Sun said it would continue to protect its R&D investments. The company said that its R&D spending should be flat over the next year with fringe programs being most at risk for getting the ax.

In the last 90 days, the company announced the secure Linux desktop client, Solaris on x86 , the Sun ONE software stack for Linux, and the Liberty-enabled Sun ONE Platform for Network Identity. In addition, the company announced further advances in its UltraSPARC processor-based technology and N1 architecture.

The company also mentioned that StarOffice, its alternative to Microsoft Office, began turning a profit.

"Tough times require tough decisions and everyone at Sun is dedicated to returning the company to profitability as soon as possible," McNealy said.