6,000 Sun staff feel the heat

Troubled server and storage vendor Sun Microsystems is to cut up to 18 per cent of its workforce to help drive down annual costs by as much as $800m (£536m).

The Silicon Valley firm announced on Friday that between 5,000 and 6,000 jobs, representing 15 to 18 per cent of its global staff, would be lost over the coming months. The company also revealed its software arm would be divided into two new business groups and a new group would also be formed in its Systems organisation.

The vendor claimed it would now be focusing on lucrative open source platforms and hoped the restructure would ultimately offer annual cost savings of between $700m and $800m. Chief executive Jonathan Schwartz said: "Today, we have taken decisive actions to align Sun's business with global economic realities and accelerate our delivery of key open source platform innovations - from MySQL to Sun's latest Open Storage offerings."

Sun indicated the next 12 months would see it incur charges of between $500m and $600m connected to the plans. Up to $450m of this will be incurred during the current financial year, which runs to the end of June. The company claims it expects to begin making cost savings during Q3 with the full financial benefits being felt during the first quarter of fiscal year 2010.

The latest restructuring plans come at the end of a difficult 2008 for Sun. In May up to 2,500 job cuts were announced after a revenue decline and a net loss of $34m during 2008's third quarter. Things worsened during 2009's first fiscal quarter as revenue declined more than seven per cent year on year and net loss stood at $1.68bn.

Sun's software division will now be divided into two new business groups: Application Platform Software and Cloud Computing & Developer Platforms. The former will be led by erstwhile chief marketing officer Anil Gadre and will focus on open application platforms.

The cloud computing group will be led by Dave Douglas and will work with Sun's online developer community to try and establish the company as a market leader in the cloud space. The systems platform group will be headed by John Fowler and will incorporate the company's Solaris, Virtualisation and Systems Management Software teams.

Sun also announced a couple of changes at the top as Ingrid Van Den Hoogen joins as senior vice president of corporate marketing. Executive vice president of software Rich Green departs after more than two years in the role.