Sun Laying Off 5,000 To 6,000, Restructuring Software Business

Sun Microsystems will lay off between 5,000 and 6,000 employees—approximately 15 percent to 18 percent of its workforce—under a restructuring plan the company announced Friday. The restructuring is expected to particularly hit the company's struggling software business, which is being reorganized to focus more on open-source software.

Sun said the restructuring would reduce annual costs by $700 million to $800 million. The plan will result in charges of $500 million to $600 million over the next 12 months, with the company incurring $375 million to $400 million within its fiscal 2009 that ends June 30. In a statement, Sun said it expected to begin reaping cost savings from the restructuring in the third fiscal quarter and "realize a substantial portion of the run rate benefit by the first quarter of the next fiscal year."

Sun described the restructuring as "a series of changes designed to align its cost model with the global economic climate and accelerate the introduction of compelling open-source innovations."

"Today, we have taken decisive actions to align Sun's business with global economic realities and accelerate our delivery of key open-source platform innovations—from MySQL to Sun's latest Open Storage offerings," Sun CEO Jonathan Schwartz said in the statement.

Rich Green, executive vice president of software, has chosen to leave the company, the Sun statement said.

Sun, Santa Clara, Calif., will reorganize its software organization into three new business groups: Application Platform Software, Systems Platforms and Cloud Computing & Developer Platforms.

Executive Vice President Anil Gadre, currently Sun's chief marketing officer, will lead the Application Platform Software group, which will be responsible for Sun's Java technology, MySQL open-source database and other software infrastructure products. Executive Vice President John Fowler will manage the Systems Platforms group, which includes Sun's Solaris Unix operating system, its systems management products and the company's virtualization software.

Senior Vice President Dave Douglas will be in charge of the Cloud Computing & Developer Platforms group, which will span multiple sections of the company. The group will be responsible for managing the NetBeans developer platform and the StarOffice application portfolio, among other technologies. Sun said the goal of the new group is "to firmly establish the company as a leader in cloud computing and grow this area into a significant driver of future revenues."

Sun is also realigning its marketing function "to more effectively support its sales and product organizations," the statement said. Product and technology marketing will be integrated directly into product groups with field and partner marketing now overseen by Peter Ryan, executive vice president of Global Sales and Services. Corporate marketing will be led by Ingrid Van Den Hoogen, a newly appointed senior vice president who reports to Schwartz.