Sun to cut jobs

Summary:Cuts will come in the second half of the year as part of a restructuring plan, according to a regulatory filing.

Sun Microsystems will cut its workforce in the second half of the year as part of a restructuring plan, according to a regulatory filing the company made Tuesday.

The server giant expects to incur charges of $100 million to $150 million over the next several quarters, largely as a result of the job cuts. That move comes after Sun posted a fiscal fourth-quarter profit on July 30, marking its third consecutive quarter of profitability after a string of losses.

Sun's board of directors approved the job cuts last week as part of a plan to "better align the company's resources with its strategic business objectives," according to the Tuesday filing with the Securities and Exchange Commission.

A Sun representative did not immediately have an estimate of the number of jobs that will be cut.

When the company announced profitability in its fiscal third quarter, it warned that revenue was softer than had been expected.

But in the company's latest quarter, which ended in June, Sun matched Wall Street expectations on the revenue front and handily beat earnings expectations.

During a conference call last week related to earnings, Sun CEO Jonathan Schwartz said he expected the company to generate revenue growth in the "low to mid single-digits on a year-over-year basis" for fiscal 2008, according to transcripts from the call.

"Based on the timing of product introductions, we expect revenue growth to be a bit higher in the second half of the year, relative to the first half," Schwartz said. "We expect gross margins to be in the range of 43 percent to 46 percent."

Two days after Sun reported its fourth-quarter results, however, Sun's board approved the job cuts. It's not immediately clear whether any new information came to light during those two days that may have prompted the board to approve the job cuts in order to meet the newly set expectations.

Sun currently has 34,219 employees, according to a company representative.

Topics: IT Employment, Servers

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