How about them Apples!
Sun Micro to cut up to 5,000 jobs in restructuring
Computer server and software giant also scraps poison pill plan
By Rex Crum, MarketWatch
Last Update: 5:24 PM ET May 31, 2006
SAN FRANCISCO (MarketWatch) -- Sun Microsystems Inc. said Wednesday it will cut between 4,000 and 5,000 jobs over the next six months, and sell one of its California office parks in a major restructuring to save the troubled maker of computer servers up to $590 million a year.
Santa Clara, Calif.-based Sun also said its board of directors voted to eliminate its shareholders rights plan, known as a poison pill plan. Sun's shares rose about 1.5% in late trading to a high of $4.70, after closing up 8 cents at $4.63 in the regular trading session.
said that in addition to cutting the jobs over the next six months, it would sell its campus in Newark, Calif., and its leased facilities in Sunnyvale, Calif. The job cuts of between 11% and 13% of its workforce will leave Sun with between 32,500 and 33,500 employees.
The cuts come a little more than a month after Jonathan Schwartz took over as chief executive of Sun from Scott McNealy, who remains chairman, to turn the company around as it competes with rivals such as Hewlett Packard Co. It will be the first major round of job cuts for Sun since the company shed more than 3,000 jobs when it reached a settlement in its antitrust case with Microsoft Corp. (MSFTMSFT
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Sun said intends on keeping open its two major Silicon Valley centers in Menlo Park, Calif. and Santa Clara.
Company officials said Sun would take between $340 million and $500 million in charges over the next several quarters as it implements the restructuring, with the majority of the charges taking place in its fiscal quarter ending June 30.
In a statement, Sun said the purpose of the restructuring was to "better align expenses with its core business strategy," and put in on a path toward eventually reporting operating income equal to 10% of its revenue. The company set a goal of operating income equal to 4% of revenue for its 2007 fiscal fourth quarter.
Poison pill scrapped
Sun also scrapped its poison pill, saying in a company statement that its board will now have to obtain stockholder approval before adopting a future poison pill, unless the board determines "it would be in the best interests of the company and its stockholders to adopt a poison pill without prior stockholder approval."
So-called poison pills are often adopted as a means of making a hostile takeover less attractive to a potential acquirer, often by raising the cost of a potential acquisition.
Sun said that if a poison pill is adopted by its board without stockholder approval, the poison pill must then provide that it will expire within one year unless stockholders ratify the measure.
Rex Crum is a reporter for MarketWatch in San Francisco. |
