Sun Microsystems issued a memo yesterday to employees, notifying them of nearly 2000 impending job cuts.
The company said nearly 1000 of those jobs will be from its United States operations, and about 1000 of them will be from over-sea facilities. The cuts will come from various departments.
The first wave of cuts came earlier this year under the hand of the new CEO, Jonathan Schwartz. Taking the helm in April, Schartz said he would follow the philosophy of previous CEO Scott McNealy, assuring that thereâ€™s no plan whatsoever for sweeping job cuts. In June, however the company cut 5000 jobs, and the latest wave of cuts would be completed by June 2007.
Sun's last quarter was unprofitable but the company reported revenue of $3.8bn, more than the $3.6bn Wall Street analysts expected. Investors have long portrayed the company as bloated, complaining Sun hasn't been aggressive enough in cutting costs. Recent restructuring and cuts have been widely seen as steps in the right direction.
We continue to like the prospects for a turnaround at Sun based on cost cuts (most of restructuring benefit yet to flowthrough) and operating leverage on improving growth Richard Farmer of Merril Lynch stated. Most investors remain skeptical; we think the stock can work as perception is changed.
The company, a major supplier of computer servers that run corporate networks and Web sites, was once a Wall Street favorite but has struggled since the dot-com bubble burst in late 2000.