Analysts say Sun might cut up to 8,000 jobs

Sun Microsystems might lay off up to 8,000 people later this week after it reports earnings, analysts at Merrill Lynch & Co. Inc. and Sanford C. Bernstein & Co. LLC reported.

Both the Merrill Lynch report, released Tuesday, and the Bernstein report, released Monday, say there are signs that a reduction of the Sun workforce, now at 39,400, is likely to come after earnings are reported on Thursday. A reduction of 8,000 people would equal 20 percent of the company's current total workforce.

Sun spokeswoman Diane Carlini did not return a call seeking comment on the reports.

The Merrill Lynch report, written by analyst Steven Milunovich notes that company managers have said cuts would be considered after getting a better look at demand during the second half of the fiscal year.

Sun's dependence on proprietary technology, notably its Sparc processors and Solaris operating system, "is looking increasingly retro," Milunovich wrote. Sun's endorsement of Linux is critical to its prospering, but given its installed base of Solaris, the endorsement has been tepid, Milunovich says, adding that while it's "premature to write off" Sun, the intermediate term looks tough.

The Bernstein report says Sun has waited too long to reduce its workforce. Sun's revenue is down about 45 percent from its peak, while the company's head count is down only 10 percent from its peak, the report said.

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