Sun plans to lay off as many as 5,000 employees, sell real estate and "simplify" its product line in an effort to boost profits, its newly appointed CEO Jonathan Schwartz said.
In a conference call with financial analysts after the close of markets Thursday, Schwartz, who was appointed CEO just over a month ago, laid out a restructuring plan that gave a broad overview of strategic direction that will rest on network computing and IT to support it, but he didn't provide the product-by-product line impact that IT managers look for.
Schwartz said Sun "will be simplifying our product line and reducing duplicative R&D" and highlighted products key to the companys future, such as its eight-core processor Niagara server. But he didnt explain what research and development the company now considered duplicative or how that product line would be simplified.
Similarly, in detailing its headcount reduction, Sun offered only a potential range, between 4,000 to 5,000, or 11 percent to 13 percent of its workforce of 37,500.
The company didn't specify what areas in the company will be affected. Sun will also sell its offices in Newark, California, and leave some leased facilities in Sunnyvale, California In total, the company is expecting annual savings between $480 million to $590 million from these changes.
Schwartz, a 10-year veteran of Sun, was appointed by its board just over a month ago after long-time CEO and co-founder Scott McNealy stepped down. McNealy will continue as board chairman.
Schwartz took leadership of a company that posted a loss US$217 million on the day of his appointment. Despite the loss, Sun officials pointed to the increasing revenue in its most recent quarter. Sun's revenue for the third quarter of fiscal 2006, which ended March 26, was up 21 percent year over year, totalling $3.2 billion for the period.
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