By Melita Marie Garza
Bloomberg News
Saturday, November 15, 2008

Sun Microsystems plans to cut as many as 6,000 jobs as the company tries to cope with plunging sales of server computers to financial firms, market-share losses to bigger competitors and a spiraling stock price.

The job cuts, which will eliminate as much as 18 percent of the staff, will shave $700 million to $800 million from annual expenses, Sun said yesterday in an e-mailed statement. The reduction will cost as much as $600 million in the next 12 months.

The Santa Clara, Calif.-based company is cutting back in response to "global economic realities," chief executive Jonathan Schwartz said. Sun, the fourth-largest server maker, last month posted its second loss in three quarters and said its financial-services customers were curbing orders until they have more liquidity.

"We see the level of concern spreading around the world," Schwartz said in a telephone interview. "Customers are saying, 'I am in pain, and I need budget relief.' "

He sees that as a chance to spread adoption of Sun's MySQL open-source database applications and Java programming language, which are free. Sun sells servers and service contracts with the software. To take advantage of the opportunity, Sun said it will reorganize its software business. Rich Green, executive vice president for software, will leave.

Shares of Sun, down 77 percent this year, rose 4 cents yesterday to close at $4.12. A highflier in the dot-com era -- Sun traded at $257.25 in September 2000 -- the stock has been under $5 for two weeks.

Sun is the third company in Santa Clara, at the heart of California's Silicon Valley, to announce job cuts this week as technology firms cope with the worst sales slump since the dot-com bubble burst in 2000. Applied Materials, the largest maker of chip-production machinery, said it will cut 1,800 jobs, and mobile-phone chip builder National Semiconductor said it will shed about 5 percent of its staff.

The Sun job cuts will take place worldwide, with most of the U.S. positions eliminated in the third fiscal quarter, spokeswoman Kristi Rawlinson said. The company had about 33,000 employees at the end of September.