Wednesday, May 31, 2006

New Sun CEO Schwartz makes his first major move - cost reductions!

Sun Microsystems new CEO Jonathan Schwartz today made his first major move following a month long review of the company. He will lay off 4,000 to 5,000 employees -11% to 13% of Sun's workforce - over the next six months to help the computer maker return to consistent profitability.

Wall Street has for a while been pushing Sun to reduce costs in recognition of the lower growth that they can achieve since the dot com days, but it took founder Scott McNealy moving aside for it to happen.

Given Sun's reorganisation and refocusing toward software and storage as well as more commoditised servers, the cost alignment is probably sensible to do. And with Sun's new product line-up - they may even be able to get back to profitable growth going forwards. Now that would make investaors smile!

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