Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : All About Sun Microsystems -- Ignore unavailable to you. Want to Upgrade?

To: High-Tech East who wrote (45689)	10/4/2001 9:42:12 PM
From: Brian Sullivan	Read Replies (2) \| Respond to of 64865

Sun President Hints at Forthcoming Layoffs varbusiness.com Sun Microsystems president Ed Zander says the company's business has been stung by the terrorist attack of Sept. 11 and the proceeding economic downturn that followed. As a result, Zander says Sun is looking to make cutbacks in an attempt to "rightsize" the 44,300-person company for these troubled economic times. "We have to size a little better and we have to do that now.," Zander said in an interview with VARBusiness from Sun's headquarters in Santa Clara, Calif. "We will error on the lean side because we have good strategy and a good set of products." His remarks come on the heels of pessimistic announcements from Nortel, Compaq and others who are reeling from the attack on the U.S., which has impacted the IT industry rather harshly. Zander says he expects the recent terrorist attacks on New York, Washington and elsewhere to "put a dent in the economy that will be felt for some time." Even before the attack, Sun's growth has slowed considerably. For the company's fiscal fourth quarter ended June 30, sales declined 20 percent, to $4 billion from $5.02 billion in the year-earlier fourth quarter. The company posted a profit of $134 million, or 4 cents a share diluted, compared with a profit of $717 million, or 21 cents a share diluted in the year-earlier fourth quarter. Sun finished fiscal 2001 with sales of $18.25 billion. Zander, known as a consummate salesman and operations manager throughout the business, gave a sober assessment of September 2001, which is ordinarily a "huge" month for Sun. This year, it turned out to be a "pretty terrible month," he said, on top of what was already a crummy economy. Practically no one, he noted, made sales calls the week of the terrorist hijackings of Sept. 11, which he said would not have been appropriate in light of the human toll sustained in the attacks on the World Trade Center, Pentagon and elsewhere. Unfortunately, though, he noted that the inactivity hurt his company's business. "The real question is what's happening [now]," he says. "The question is whether we're at the bottom." Zander says he does not expect to see much more change in the nation's economy for the next several quarters at least. As a result, he said, Sun is looking to "right size" its business to bring it in line with the current economic climate. For example, Zander says Sun is looking at the current number of Sun personnel assigned to work with the financial services companies and telecommunications giants. Because those two fields are struggling and have excess computing capacity at the moment, he says Sun might be better off redirecting some of its efforts to health care, manufacturing, retails and other industries where IBM is a world leader. "We hope to do to IBM in those fields what we did to them in financial services and telecommunications," Zander says. His remarks came on the heels of somber economic news from the likes of AT&T, Nortel, Compaq and others. On Wednesday, for example, AT&T chairman Michael Armstrong said he expects capital spending by AT&T to fall by as much as 20 percent next year. That followed Nortel's disastrous announcement that it would cut as many as 20,000 additional jobs, and Compaq's earlier disclosure that sales for this quarter will likely come up $1 billion short of goal as a result of the terrorist attacks, its pending merger with Hewlett-Packard and a storm in the Far East that delayed the arrival of key products to the U.S. Although Compaq's current troubles and its ill-timed, pending $25 billion merger presents Sun an opportunity--this week alone Zander himself has talked with current Compaq and Hewlett-Packard customers considering Sun for the first time--he nonetheless says Sun is looking at making selective cuts where possible. He says Sun won't cut too deeply because it still sees the IT sector as growing at a double-digit rate long-term. But it must consider sensible cuts given the current state of affairs. That includes adjusting its operations in the field.