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Sun cuts 5,000 to 6,000 jobs

Sun said Friday that it will lay off 15 percent to 18 percent of its workforce--or 5,000 to 6,000 people--as it restructures amid weak demand, a series of poor quarters and a business model that rallies around open source software.Add it up and Sun is looking to save about $700 million to $800 million annually.
Written by Larry Dignan, Contributor on

Sun said Friday that it will lay off 15 percent to 18 percent of its workforce--or 5,000 to 6,000 people--as it restructures amid weak demand, a series of poor quarters and a business model that rallies around open source software.

Add it up and Sun is looking to save about $700 million to $800 million annually.

Sun is a company mired in what seems like a never-ending transition. The bulk of its revenue comes from hardware sales--an increasingly tough market--yet it sees its future in open source software like MySQL and services it can package around those applications. The rub: Those growth markets have much smaller revenue bases.

Sun said it will organize around four units--application platform software, systems and cloud computing and developer tools.

In a statement, Sun said that it will take charges between $500 million and $600 million over the next 12 months. About $375 million to $450 million of those charges will occur in the current fiscal year.

Sun said that its "new organizational alignment is a recognition of the comprehensive role software plays in the company's growth strategy." That's where you get the Sun paradox--Sun makes most of its money from hardware. The transition is likely to be painful: Sun will have to get smaller as it transforms.

The company's most recent quarter was disappointing and Sun's revenue has been flattish for multiple quarters. Sun did garner some attention for its Open Storage roll-out, but the revenue base is small there too.

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Sun CEO Jonathan Schwartz also juggled the company's executive line-up.  Anil Gadre, Sun's chief marketing officer, will lead the application platform unit, which includes Java, MySQL and Glassfish. John Fowler, executive vice president, will lead the systems platform unit, which will include Solaris, Sun's virtualization business and storage. Dave Douglas, senior vice president, will lead the cloud computing and developer business. That unit includes StarOffice and NetBeans.

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