Sun Microsystems on Friday said it will lay off 15 to 18 percent of its workforce. The announcement comes as part of a series of changes the company is making as it continues an uphill struggle.
Beyond laying off up to 6,000 employees, Sun will also break up its software into new business groups — Application Platform Software, Systems Platforms, and Cloud Computing & Developer Platforms. Sun’s intention is to boost its open-source momentum and attract new sectors of the market that view technology as a competitive weapon.
Sun expects the changes to align its costs with the global economic climate and accelerate the introduction of compelling open-source innovations. But some analysts are skeptical that these changes will fix the internal problems.
“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,” Sun CEO Jonathan Schwartz said.
Improving Cost Structure
Sun’s board of directors has approved a restructuring plan that aims to reduce costs by approximately $700 million to $800 million annually. That includes a workforce reduction of 5,000 to 6,000 employees around the globe.
While the full benefits of the dramatic cuts won’t be realized until the third quarter of its fiscal year 2009, Sun said it expects a substantial benefit in its first fiscal quarter.
“This is more of a continuation of Sun’s downward spiral that has been going on for a while — and it seems to be accelerating. Another 18 percent on top of the last round of layoffs is way beyond just trimming fat. We are well into muscle and bone and maybe some vital organs,” said Dana Gardner, principal analyst at Interarbor Solutions.
An Executive Shake-Up
Sun’s organizational realignment seeks to leverage what the company sees as strengths in its software…