Sun sheds jobs after Q1 slowdown

Following a shortfall of almost $US1 billion in first-quarter sales, Sun Microsystems has announced it will cut 9 per cent of its workforce - about 3900 workers -- by the end of the second quarter to reduce expenses. However, the Australian operations of about 800 staff will have to wait several days to discover how the cuts will impact its head count and operations.

Sun spokesperson Catherine Vissiere said the company will also consolidate excess facilities, taking a $500 million charge in the second quarter as a result of the lay-offs and facilities closure.

The cuts come after a disappointing quarter. Executives said the events of September 11 had a significant impact on its results while competitive pressures had very little, if any, impact on the results, according to executives.

In a conference call with analysts, Sun's CFO, Michael Lehman, said: "Our business nearly ground to a halt in the two weeks after that tragic day. We believe this event had significant impact on the last two to three weeks of the quarter."

The attacks impacted Sun customers such as telecommunications and financial services companies, thereby seriously dampening the company's sales, he said.

Sun normally receives a lot of its orders during the last month of the quarter, Lehman said. It was uncertain whether purchases were delayed and would be made up in the current quarter or had been lost outright.

Sun Microsystems warned investors back in August that the company was unlikely to reach the $US3.7 billion revenue target needed to break even this quarter.

The company has now said revenue came in between $US2.7 billion and $2.9 billion and expects an operating loss of between 5 cents and 7 cents per share.

Until now Sun has avoided the staff reductions other tech companies endured, instead employing a range of cost-cutting measures, including forcing staff to take leave.

Sun would not provide a revenue range for the current quarter, due to uncertainties surrounding sales.

However, the cuts and closures will save about $125 million to $150 million per quarter by the fourth quarter.

"Our goal is to be profitable no later than the June quarter of this fiscal year," Lehman said.

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