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Sun Microsystems to Lay Off up to 6,000 Workers, Re-Focus on Open Source Market

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November 14, 2008

Sun Microsystems to Lay Off up to 6,000 Workers, Re-Focus on Open Source Market

By Michael Dinan, TMCnet Editor

Citing a worsening economy, a Santa Clara-based, open source-focused company that provides IT software, systems, services and microelectronics today announced that it would lay off up to 6,000 workers.

Officials at Sun Microsystems, Inc. say that cutting about 18 percent of their global workforce is part of a plan to reign in costs by about $700 million to $800 million annually.
According to the company’s chief executive officer, Jonathan Schwartz, Sun is also creating new business groups in its software division to focus on open source momentum and new market sectors that 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 Schwartz, pictured right.
The news comes as unemployment claims reportedly hit their highest levels in more than eight years.
In the IT and telecommunications space this week, as TMCnet reported, the world’s largest maker of computer chips, Intel Corporation, say they’re expected to see at least $1 billion less in revenues for this quarter than first projected. Also, as TMCnet reported, days after posting third-quarter revenues down 14 percent year-over-year and saying it was laying off 1,300 workers, Nortel Networks Corp, the largest telephone equipment maker in North America, is rumored to be facing bankruptcy.
Officials at Sun say their reorganization will create three new business groups: Application Platform Software, Systems Platforms, and Cloud Computing & Developer Platforms.
Sun says the new alignment marks a nod to the role that software plays in its growth strategy.
In its restructuring and mass-layoff, the company says it expects to incur charges of $500 million to $600 million over the next 12 months, including $375 million to $450 million within its current fiscal year.
“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,” company officials say.

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Michael Dinan is a contributing editor for TMCnet, covering news in the IP communications, call center and customer relationship management industries. To read more of Michael’s articles, please visit his columnist page.

Edited by Michael Dinan

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