Sun Microsystems will lay off close to 11 percent of its workforce, as the company continues to be punished by a slowdown in technology spending, Sun said Thursday in its earnings report for its first fiscal quarter of 2003.
Sun reported revenue of US$2.7 billion for its first fiscal quarter, which ended Sept 29, the company said in a statement. This marks a 4 percent drop from the same quarter a year ago when Sun pulled in $2.9 billion in revenue. Sun plans to reduce its workforce by approximately 11 percent from its current level of close to 39,000 workers.
Sun, based in Santa Clara, California, expects to take a charge of approximately $300 million in its second fiscal quarter as a result of the headcount reductions.
The company reported a net loss of $111 million or a loss of $0.04 earnings per share, Sun said in the statement. Excluding charges for investment losses, previous restructuring costs and tax effects, Sun reported a net loss of $78 million or a loss of $0.02 per share, meeting analyst estimates, which excluded these charges. Analysts polled by Thomson Financial/First Call predicted that Sun would post a loss of $0.04 per share on $2.8 billion in revenue.
Reports issued earlier this week from Merrill Lynch & Co. Inc. and Sanford C. Bernstein & Co. LLC said that Sun could announce layoffs of up to 8,000 people or 20 percent of its workforce.
Sun, one of the main providers of Unix servers, has been punished by the downturn in the economy. In particular, the company lost large amounts of business as telecommunications companies pulled back on IT spending.
Shares of Sun rose more than 6 percent to close at $2.99 ahead of the earnings announcement.