Sun fires 4000 staff as profits fade

Financial analysts have predicted Sun Microsystems will make a sizeable loss for the year to 31 May 2002, after the firm cut almost 4000 jobs and issued a profit warning.

On Friday, the company said it would cut 4000 jobs worldwide, totalling nine per cent of its workforce, and added that it did not know when sales would pick up again.

The firm's net loss for the three months to the end of September stood at 5-7 cents per share, deeper than analysts' estimates of four cents. The period was the first quarter of Sun's financial year 2002.

Analysts at Goldman Sachs and UBS Warburg both said today [Monday] they now expected Sun to make a loss on the year, of between six and seven cents per share respectively.

Sun executives have insisted all summer that the company would not make heavy job cuts or trim R&D in the face of the slumping economy.

But at the recent launch of its Sun Fire 15K server, executives hinted that this may change in the wake of events in the US on 11 September.

Scott McNealy, chief executive at Sun, said: "Right now, people aren't buying."

But the firm has insisted that cuts will not spread to R&D budgets as the server market grows ever more competitive.

Sun estimated it had lost around £200m in sales as a result of the terrorist attacks, and said it couldn't predict whether the lost sales would be regained in the next three months.

However, the firm said it would return to profit in the three months to June 2002.

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