Silicon Valley networking giant and maker of servers and business software, Sun Microsystems plans to lay off as many as 1,500 employees this week as part of its ongoing restructuring plan announced in November.
This latest round of job cuts follows the layoff notice given to 1,500 employees in January as part of its restructuring plan that will involve layoffs of 15 to 18 per cent of its global workforce, or around 6,000 employees. (See: Sun Microsystems plans major restructuring, to slash 6,000 jobs)
The Santa Clara- (California) based company had said that it would save around $700 million to $800 million annually after incurring a one time charge of approximately $500 million to $600 million.
Yesterday's announcement of 1,500 layoffs and the company's aim of shedding 6,000 employees, will bring its staff strength to around 28,800 employees worldwide.
A spokesman for Sun Microsystems said the latest round of lay offs will come from all levels of the company, both in the US and overseas including vice presidents and directors.
The company said in a statement that, "Sun continues to make important choices to streamline operations and align resources to best address market opportunity and position the company for improved financial performance and long-term growth."
Founded in 1982, Sun is the seventh-largest company in Silicon Valley with reported annual sales of $13.9 billion.
Sun's profits slid to $88 million in second quarter 2008 from $329 million for the same quarter last year on revenues that declined to $3.78 billion from $3.84 billion last year, leading to takeover speculations.
This month there were widespread rumours that International Business Machines Corp was in talks with Sun Microsystems Inc to take over the ailing computer major, according to a widely publicised report in The Wall Street Journal. (See: IBM bidding to take over Sun Microsystems: report)
Although neither IBM nor Sun have made any comments so far, the report said the deal would be worth at least $6.5 billion and IBM is said to be pouring over Sun's contracts and other documents to see if a deal is worthwhile.
Industry experts however question the company's motive of laying off its direct sales force, especially when the company is trying to increase its sales in servers, storage, software, and services to enterprise clients.
This would mean that Sun Microsystems will have to rely more on its channel partners to sell its products and this strategy may be in line with its earlier plan of moving its North American business to an indirect sales model for all, excepting its large customers.