After several rounds of layoffs last year, server and storage company Sun Microsystems said Tuesday it would again restructure, reorganize and reduce its workforce, according to a regulatory filing.
Although the filing lists only restructuring charges of $100 million to $150 million, JPMorgan analyst William Shope estimates that between 1,300 and 2,000 employees could be affected.
The move comes as Sun continues to rebound in an increasingly competitive and consolidation-prone technology sector.
Sun has operations in Broomfield and Louisville, but it is unclear how the cuts would affect Sun’s operations in the state. Calls to a company spokeswoman Tuesday were not returned.
Globally, Santa Clara, Calif.-based Sun has laid off 3,800 employees since June 2006.
Shope’s estimates are based on an average severance package of $75,000, although he notes that the average package during earlier layoffs was $70,000.
“While the company had suggested that such a move was on the horizon on its earnings call last week, the magnitude of today’s announcement is somewhat smaller than we would have hoped,” wrote Shope, who rates Sun shares “underweight.”
“Our doubts over revenue growth and margin sustainability could best be assuaged by significant operating expense reductions. And while we are encouraged by today’s announcement, we await signs of more aggressive actions.”
As of June 2006, Sun had more than 4,000 workers in Colorado, although it laid off several hundred here as part of the 2006 restructuring effort. So far this year, Sun has reduced its Colorado workforce by at least 110, according to records from the Colorado Department of Labor.
Sun said last year it would move its remaining Louisville workers over to Broomfield and put the facility up for sale. Sun acquired the Louisville campus in 2005 during its $4.1 billion acquisition of StorageTek.
Sun reported income of $329 million last month, exceeding analysts’ estimates. Fourth-quarter earnings were 9 cents a share, compared with a loss of $301 million, or 9 cents a share, a year earlier. Shares of Sun closed up 4 cents at $5 on Tuesday.
The job cuts may save Sun 3 cents to 7 cents a share annually, Banc of America Securities analyst Scott Craig said in a note. The New York-based analyst, who rates the shares “buy,” said the company may fire as many as 2,400 workers. Sun had 34,500 employees as of April, according to its earnings report.
“The company is entirely committed to achieving its 10 percent operating margin target,” Craig said.
Sun also plans to reduce the size of its board to 10 members from 11, according to Tuesday’s filing.
Bloomberg News contributed to this report.
Staff writer Kimberly S. Johnson can be reached at 303-954-1088 or kjohnson@denverpost.com.
