Sun will cut about 11 percent of its work force, reducing the number of employees from 39,400 to about 35,000, Chief Financial Officer Steve McGowan said in a conference call with reporters Thursday.
The figure includes 1,000 cuts announced six months ago, but doesn't include further cuts that will affect contract and temporary workers, McGowan said.
The cut is expected to make it easier for Sun to return to profitability. The break-even point had required revenue in the high US$3 billion range, but now will be closer to US$3.2 billion or US$3.3 billion, McGowan said.
The Santa Clara, California, company had a deeper net loss of US$180 million for the year-ago quarter.
The US$2.7 billion in revenue for the company's fiscal first quarter, which ended September 29, was less than the amount Sun had forecast, the US$2.9 billion of the year-ago quarter and the $2.9 billion some analysts had expected. US revenue dropped 7 percent, and Japan revenue fell 13 percent.
"The (customer spending) uptick we expected in the last couple weeks of September didn't fully materialize," McGowan said.
Sun chiefly makes high-end server computers, networked systems that handle round-the-clock tasks such as bank account transactions. The company is under pressure from weak corporate spending, exacerbated by competition from IBM, Hewlett-Packard, Dell Computer and Microsoft.
The job cut is less drastic than the layoff of up to 8,000 workers that some analysts had expected. Cuts will affect all divisions, but will hit research and engineering divisions more lightly, McGowan said.
Sun will take a charge of about US$300 million in the second quarter, which ends December 31, for the layoffs. Job cuts will begin in the next four weeks in the United States, McGowan said.
