Sun Micro to cut as many as 5,000 jobs

San Francisco, June 1: Sun Microsystems Inc., which has struggled in recent years to turn a profit and boost revenue, said on Wednesday it would cut up to 5,000 jobs, or 13 percent of its workforce, over the next six months.

Shares of the computer server maker rose 1 percent, though an analyst said Wall Street had already factored in the job cuts -- the first big move by Chief Executive Jonathan Schwartz since he took over last month from co-founder Scott McNealy.

Sun, which made an operating loss last quarter, also set a goal of posting operating income of at least 4 percent of revenue for its fiscal 2007 fourth quarter, in line with some analysts' expectations, and 10 percent over the long term.

Since the implosion of the dot-com and Telecommunications investment bubbles in 2000 and 2001, Sun has suffered more than rivals International Business Machines Corp. and Dell Inc. as the market moved to cheaper servers using Intel Corp.-compatible chips and the Linux operating system.

''It's a mixed bag in that Sun is finally taking more significant cuts to its cost structure,'' said Pacific Crest Securities analyst Brent Bracelin. ''It's negative in the fact that some people were expecting more.'' Some analysts had called for cuts of 12,000 or more among Sun's 37,500 staff. In addition to jobs, the Santa Clara, California-based company will shed a few Silicon Valley properties, putting its Newark campus on sale and exiting leased facilities in Sunnyvale.

Schwartz said the top-to-bottom review, which he undertook after its results in April, would position it for more growth.

''We are very confident that we're making the right choices,'' Schwartz said on a call with analysts.

Sun said all its moves should yield annual savings of 0 million to 0 million, with the full impact expected in the fourth quarter of fiscal 2007. It expects restructuring charges of 0 million to 0 million over several quarters, with most falling in the quarter ending June 30.

For the first time in many quarters, Sun issued a revenue outlook, forecasting fiscal 2007 revenue growth in ''the low-to-middle single digits'' and a gross margin ''around 43 percent.'' ''By no means is this going to make Sun really compelling unless we do start to see sustainable growth,'' Bracelin said.

Analysts had forecast Sun would generate .8 billion in fiscal 2007 revenue, an 8 percent rise from the .8 billion Wall Street expects for fiscal 2006, according to Reuters Estimates.

Last week at the JPMorgan Technology conference, Chief Financial Officer Mike Lehman, who recently took up the CFO post again after a brief retirement, said the board was to meet last week and again in June to discuss how to resize Sun.

''We expect to bring the company to profitability,'' he said.

''There's no reason to expect why a billion company can't be.'' Sun has cut 11,000 jobs since the downturn, excluding those announced on Wednesday, but that was not enough for Wall Street.

Sun shares rose 1.1 percent in extended trade to .68, after climbing 8 cents, or 1.8 percent, to close at .63 in regular trade.

Reuters