Sun to Cut 5,000 Jobs, Close Campuses

Sun disclosed Wednesday that it plans to cut 13 percent of its workforce over the next six months in an effort to accelerate profitability. The cuts would mean that as many as 5,000 could lose their jobs, and the closure of Sun's Newark, N.J. and Sunnyvale, Calif. campuses.

The cuts are a result of a thorough review of Sun's internals by an executive team lead by president and CEO Jonathan Schwartz. Through the changes, the company hopes to better align its expenses with its goals for the future, Sun said in a statement.

Savings of between $480 million and $590 million are expected as a result. Additionally, the company expects to spend between $340 million and $500 million to implement the plan, with the majority of the spending coming in the current quarter.

"We've worked hard to reinvent the entirety of Sun's product line, from software to systems, storage and services," Schwartz said in 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."

After the dot-com bust of 2001, Sun never recovered financially. Much of its woes came from the costs to procure its equipment; companies turned to cheaper servers, such as those from IBM and Dell, as a way to cut costs.

However, Sun has responded to the challenges, beginning with the debut of lower-cost servers last year, and a focus on "eco-responsible computing." That initiative aims to offer systems that run on less power, saving money in operating expenses which in turn is better for the environment.

At a financial conference last week, Sun chief financial officer Mike Lehman said the company would return to profitability. "There's no reason to expect why a $13 billion company can't be," he said.