Based on preliminary data, earnings on an operational basis will be a loss in the range of ($0.05) to ($0.07) per diluted common share.
Sun is announcing a program to reduce its workforce by approximately 9% as well as consolidate excess facilities. As a result of these capacity reductions, the Company expects to record a charge of approximately $500 million in the fiscal second quarter.
Sun’s Chairman and CEO, Scott McNealy said, Sun’s position as a leading provider of internet and network infrastructure is stronger than ever, but the current economic environment is obviously very difficult. The computer industry is continuing to consolidate and downsize itself. In addition, the events of September 11 have impacted us all. Things were tough with the economy before, but now we are facing increasing uncertainties both in the US and globally. To ensure the long term health of the business, we are making structural changes to the capacity of our company.
McNealy continued, Over the past several months, we’ve been aggressively managing costs in all areas. Our employees came through in force and without that, we would clearly be talking about reducing capacity to an even greater extent. We intend to get the business profitable again as soon as possible.
McNealy added We have the right vision and strategy. We will continue to develop the great technologies and products that have been the hallmark of Sun. We’re going to stay focused on the business and the strength of our products – highlighted by last week’s introduction of the Sun Fire[tm] 15K, our new high-end server; the continued introduction of higher performing UltraSPARC[tm] III chip sets throughout the product line; the improved competitive position of our Sun StorEdge[tm] storage offerings; the impressive breadth and depth of the Sun[tm] Open Net Environment (Sun ONE) software stack; and the momentum we continue to see in our services business.
McNealy concluded, The well documented macroeconomic factors throughout the world are certainly weighing heavily on our customers and partners, but we are confident that the market opportunities for Sun are absolutely huge. We have absolutely no doubt that we will emerge from this environment with a stronger, more focused company.
SOURCE: COMPANY PRESS RELEASE
