Sun Microsystems, which yesterday announced it would cut a further 4 400 jobs, has told international offices, including SA, to cut costs, according to sources.
I don't expect any job cuts in Sun's African operations.
Stefano Mattiello, MD, Sun South Africa
However, Sun SA MD Stefano Mattiello refuted the speculations about the local impact: "In no form have we received any directive from the head office. I don't expect any job cuts in Sun's African operations."
The newest round of retrenchments was announced with the group's first-quarter financial results showing a net loss of $0.04 per share and a 7% decline in revenue.
The group laid off 9% of its staff last year, taking a $517 million restructuring charge. The latest cuts will bring to 20% the total reduction in headcount since the start of last year.
Sun CEO Scott McNealy said at a Gartner conference in Florida earlier this month that concerns that Sun could go out of business were misplaced, according to Information Week.
He said Sun had $5 billion to $6 billion in cash and almost no debt. "Earnings are an opinion, cash is king," he is reported to have said.
Reuters reports that Sun said it expected a profit in the second half of its fiscal year, which ends next June, but executives declined to describe their expectations for the current quarter and said business defied normal trends and failed to pick up in September.
Sun shares rose 3% in after-hours trade following the announcement of the long-awaited job cuts, which puts it more in line with competitors that shed more workers earlier.
Sun plans 4 400 job cuts, most this year, in addition to 3 900 announced a year ago, meaning Sun will have cut about 20% of its workforce since the technology downturn began.
But the new cuts, which included 1 000 reductions announced in April, were less than some analysts said were needed, and Sun's vague business outlook raised questions.
"While Sun understandably is surrounded by a sea of uncertainty, it still seems as if it may be basing its profitability targets on assumptions that are on the optimistic side," said Goldman Sachs analyst Laura Conigliaro.
No forecasts
"I am so out of the forecasting game it does not even make sense," chief executive Scott McNealy said on a subdued conference call with investors, when asked for his outlook.
Sun reported a net loss of $111 million or 4c per share in its fiscal first quarter ended in September, compared with a loss of $180 million or 6c per share in the year-ago quarter.
Excluding a $31 million loss on equity investments, a $24 million charge in connection with previous restructuring charges, and a $22 million benefit for related tax effects, all considered non-operating items, Sun reported a loss of 2c per share. This beat expectations tallied by investor research firm Thomson First Call of a 4c loss.
Market share seen key
CFO Steve McGowan declined to forecast profit margins for the current quarter, saying Sun was ready to sacrifice to gain share in its battle, chiefly with IBM and HP.
Sun strategy, he said, was "win the business we can. Take market share and see how the margins square up at the end of the quarter."
Sales in September, the last month of the quarter when technology companies often do around half their sales, had failed to pick up, especially in the US, he said.
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