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Sun pledge to keep jobs despite new losses

Posted on: Saturday, 18 October 2003, 06:00 CDT

SUN Microsystems, the embattled US network computing giant which has its European headquarters in Scotland, reported a gaping loss in its first quarter, but it insisted it had no plans to restructure or cut more jobs.

The company, which employs about 750 full-time workers at Linlithgow, West Lothian, reported a net loss of $286m ((pounds) 170m) for the three months to September 28, compared with a loss of about (pounds) 66m in the same period the previous year.

Sun also posted a year-on-year decline in sales for the tenth consecutive quarter. Sales in the quarter just ended plunged almost 8% to around (pounds) 1.5bn.

A spokesman for Sun said: "At this point, there are no plans to either restructure our Scottish operations, or for an across-the- board reduction in force. However, we continually evaluate business conditions and can never rule out such an action."

Analysts have been arguing that Sun, based in California, needs to make massive cost cuts involving both headcount and research and development if it is to remain a major player.

The company has been under pressure from analysts and investors to acknowledge that its current strategy, combined with its reluctance to reduce its workforce further, appears to be failing.

However, Scott McNealy, Sun's chief executive, defended the company's business plan and said it was too early to consider corporate restructuring.

He said: "This company has to start growing again and start making a profit. Then people will be looking for reasons why we're succeeding as opposed to, 'You're wrong if you do this. You're wrong if you do that'."

Sun's problems stem not only from slow corporate demand but also an industry-wide shift towards lower-cost hardware and software, such as Intel's microprocessors and the open-source Linux operating system.

Sun has made moves in both areas, even as it develops its Unix- based Solaris operating system and Sparc processor. The company is also increasing the visibility of its Java language, branding software systems with the Java name and instituting an aggressive pricing strategy.

"We're doing our best to be a disruptive innovator," said McNealy. "We think it's working. It's not showing up in our numbers, but we're plugging along and I think we're making good progress. So we're going to focus on execution."

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