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Sun Lays Off 1,500 as IBM Merger Looms
 

Sun Lays Off 1,500 as IBM Merger Looms

Tuesday Mar 31st 2009 by Paul Shread

Sun continues with its cost-cutting plans amid reports of a tough quarter and no signs of a deal with IBM.

Sun Microsystems (NASDAQ: JAVA) is moving ahead with plans to lay off as much as 18 percent of its workforce, even as rumors persist that the company could be acquired by IBM (NYSE: IBM).

Sun spokesperson Dana Lengkeek said layoff notifications were given to 1,500 employees this week, on top of 1,300 in January. That makes the company about halfway through its planned reduction of 5,000 to 6,000 employees.

"Reductions are being made across all levels, including vice presidents and directors," said Lengkeek. "Sun remains committed to its strategy with a consistent focus on providing innovations that enable customers to address their business needs. We continue to see great opportunities for our technologies globally and are focused on our customers and partners."

It's been 12 days since the Wall Street Journal reported that IBM was in talks to acquire Sun, and neither side has confirmed that talks are underway. The WSJ has since reported that negotiations have been slowed by a lengthy due diligence process, as IBM studies Sun's finances and operations.

Any deal could also face antitrust issues too, with servers and mainframe disk and tape storage among the areas that could face scrutiny (see Sun Launches 'Open Cloud' as Merger Rumors Swirl).

The layoffs also come as Sun's fiscal third quarter draws to a close. Research firm Wedge Partners said it believes the quarter was a tough one for Sun, which will report its quarterly results in late April.

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