Rumor: Sun to Lay Off 1,500 Workers

Following comments from industry insiders that a $7 billion-plus acquisition by IBM is likely, reports are emerging this week that Sun Microsystems Inc. is laying off about 1,500 workers under its restructuring plan.

 

According to this article by James Niccolai of ComputerWorld, the makers of the Solaris operating system are targeting “customer-facing staff,” including professional services and direct sales employees.

 

Niccolai cites a research note from Wedge Partners Corp.

 

“Wedge Partners claimed that 25 to 50 percent of those workers may be affected, and it said that such a move would make Sun more reliant on channel partners to sell its products,” Niccolai reports.

 

Sun could not immediately be reached for comment.

 

According to Niccolai, Sun confirmed some job cuts but wouldn’t disclose a figure, except to say the layoffs would affect all levels in the company.

 

It isn’t clear yet what the rumors mean for a rumored acquisition of Sun for about $11 per share by IBM (News - Alert).

 

As TMCnet reported, the head of the world’s largest maker of computer chips recently said the deal likely will go through.

 

According to this filing with the U.S. Securities and Exchange Commission, Intel Corp. Chief Executive Paul Otellini said Sun was shopped “around the valley and around the world in the last few months.”

 

“A lot of companies got calls or visits on buying some or all the assets of the company,” Otellini reportedly said. “It looks like IBM is in the hunt now. And at a hundred-and-some-odd-percent-premium, I suspect they’ll get it.”

 

The comments come as IBM is rumored to be eyeing massive U.S. worker lay-offs. The Los Angeles Times puts the total figure at 5,000.

 

The Wall Street Journal broke news of the possible IBM-Sun deal earlier this month, citing unnamed sources.

  

According to the WSJ, the combination “would bolster IBM’s heft on the Internet, in software and in finance and telecommunications markets.”

 

“The two companies have a common interest in that both make computer systems for corporate customers that aren’t reliant on Microsoft (News - Alert) Corp.’s Windows software, and their product lines are less dependant than rivals’ on Intel Corp.’s microprocessor technologies,” the newspaper reports. “The two companies are also strong supporters of open-source Linux and Java software.”

 

Sun created the Solaris operating system, a version of Unix, and the Java Internet programming language. About 1 million developers use Sun’s software to write applications. The company also long has been committed to open source software. Even as it was going through a painful restructuring, the company released a new version of its flagship open source database, MySQL 5.1.

 

Sun’s third quarter ends today, and the company will report its financial results April 28.