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Sun Microsystems to Cut 4,400 Jobs

October 17, 2002

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SAN JOSE, Calif. (AP) _ Sun Microsystems Inc. will cut 11 percent of its work force to bring its expenses in line with sales, despite posting fiscal first-quarter results Thursday that beat Wall Street expectations.

The computer and software maker will cut 4,400 its 39,400 employees in a move that has been expected because corporate technology spending has not rebounded as expected.

It’s the second major round of cuts at Sun, which a year ago cut 10 percent of its work force, or nearly 3,900 jobs, after holding out longer than other high-tech companies to make staff reductions.

Scott McNealy, Sun’s chief executive, said he was slow to cut jobs because of the difficulty in replacing talent once the economy rebounds. Such a quick recovery is now seen as unlikely.

``Sun has done an outstanding job in maintaining fiscal discipline, but it hasn’t been enough to counterbalance revenue shortfalls caused by the protracted economic downturn,″ said Steve McGowan, Sun’s chief financial officer.

For the three months ended Sept. 29, Sun lost $111 million, or 4 cents per share, compared with a loss of $180 million, or 6 cents per share, in the same period last year.

Excluding special items, the company lost $78 million, or 2 cents a share. At the same time last year, its pro forma loss was $158 million, or 5 cents per share.

Analysts were expecting a loss of 4 cents per share on sales of $2.87 billion, according to a survey by Thomson First Call.

First-quarter sales were $2.75 billion, down 4 percent over the $2.86 billion posted in the same period last year.


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