Sun slashes 5,000 jobs and scales back R&D

Sun Microsystems is cutting up to 5,000 jobs and scaling back on research and development (R&D) as part of a US$590 million cost-cutting initiative.

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By  Dylan Bowman Published  June 11, 2006

Sun Microsystems is cutting up to 5,000 jobs and scaling back on research and development (R&D) as part of a US$590 million cost-cutting initiative. The company will reduce its 37,500 worldwide workforce by up to 13% over the next six months, sell parts of its real estate portfolio in the US and reduce investment in “non-core processes and research and development activities”, it said in a statement last month. Sun said the restructuring was designed to ‘focus and streamline’ the company and ‘better align expenses with its core business strategy’. “We’ve worked hard to reinvent the entirety of Sun’s product line, from software to systems, storage and services,” Jonathan Schwartz, Sun’s CEO and president, said in the statement. “It’s on that rebuilt foundation, that we are reinventing our business model on a far simpler base and focusing our energies on the automation, energy efficiency and network innovation at the heart of our technology leadership,” he added. Schwartz has declined to say where the job cuts will happen, stating in a conference call that ‘everything is under examination’. R&D efforts will have to become more efficient, with the company looking at a “common pool” of talent, he said. The slashing of its workforce and cutback in R&D comes just over a month after the company’s co-founder Scott McNealy stepped down as CEO to be replaced by Schwartz — formally company president (see IT Weekly 29 April – 5 May 2006). McNealy had been criticised for his reluctance to cut jobs at the firm, especially in its R&D teams, believing that innovation was central to the company’s success. Industry observers had therefore seen the appointment of Schwartz as a sign that job losses would be inevitable, despite the new CEO claiming upon his appointment that there was ‘no plan whatever’ for such cuts and insisting the company was ‘not planning on changing the strategy’. Sun has already cut more than 13,000 jobs between 2001 and 2005 and this latest announcement will bring the total figure up to 18,000 in the last five years. However, Sun’s Middle East marketing manager Graham Porter said the cuts were unlikely to affect the firm’s regional presence or 175 employees. “The cuts are not really aimed at what we call customer facing services which, if you look at the Middle East, we are primarily a purely customer facing organisation — its sales, its marketing and its customer support,” explained Porter. “If you look at what is happening around the world, we have really strong growth here — it’s a real success story,” he claimed. “The Middle East if anything is somewhere that the company is investing more in. We are actually hopeful we will get more investment and more headcount to tackle all the different opportunities we see in the region,” he went on to add.

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