Sun curries favor with Wall Street, cuts 5000 jobs
Computer server maker Sun Microsystems Inc., whose revenue has declined four years in a row, said Wednesday it planned to cut 4,000 to 5,000 jobs in an effort to return to consistent profitability.Are all these costs in severance pay? Hell no. Much of it pays for early lease terminations.
The cuts, which will reduce Sun's 37,500-person work force by  to 13 per cent over the next six months, will cost Santa Clara-based Sun from $340 million to $500 million US over the next several quarters, the company said.
Sun executives expect the plan, which also includes selling real estate and exiting leases, to save the company from $480 million to $590 million, once it is fully implemented sometime around June of next year.So, what happened to the stunning Sun, once a Wall Street darling?
[The company] has struggled since the dot-com bubble burst in late 2000. Servers that run processors based on Intel Corp. designs and Microsoft Corp.'s Windows or the free Linux operating systems have grown increasingly powerful, often performing the same jobs at a fraction of the cost of Sun products.Holy crap! You better believe it wasn't small investors doing the driving.
Investors have driven down Sun shares from a high of about $64 in September of 2000 to a range of about $3.50 to $5 over the past year.
So, why is it that Sun fell out of favor with big Wall Street firms?
Some analysts have criticized Sun's management for not cutting costs more dramatically.Now, you know what it takes to please Wall Street.* * *
Despite losing money every year since 2001, [former CEO, Scott] McNealy had resisted making further cuts in Sun's workforce and research and development.
He also unnerved Wall Street when he stopped predicting financial results after missing earlier projections.* * *
[In contrast,] It took just five weeks on the job for Sun Microsystems Inc. Chief Executive Jonathan Schwartz to decide he had too many employees.
And that's not all.
[Sun] also said on Wednesday that its board of directors voted to eliminate its shareholders rights plan, known as a poison pill plan, which makes a takeover plan harder by imposing extra costs.Schwartz is priming Sun for a Wall Street takeover.
Wakeup America. There's a war going on and the enemy is within.