Sun Microsystems will axe up to 18% of its workforce worldwide with the aim of reducing costs by as much as $800m over the next twelve months to prepare for what is shaping up to be the deepest recession in years.
In a statement sent to Microscope today, Sun said it would get rid of approximately 5,000 to 6,000 employees and expected to incur a charge in the range of $500m to $600m in the next 12 months.
"We believe the number of positions that will be eliminated, when combined with the other cost cutting measures and organisational changes being implemented, will put the company on track for sustained profitability and improved financial performance," said the vendor. .
"Sun expects to begin realising cost savings in the third quarter of the company's fiscal year 2009, and expects to realise a substantial portion of the run rate benefit by the first quarter of next fiscal year," it added.
The organisational change has resulted in Sun's software organisation being split into three divisions; Application Platform Software, Systems Platforms & Cloud Computing and Developer Platforms.
The restructure is a nod to "the comprehensive role software plays in the company's growth strategy" the firm added.
Vendors and channel partners supplying IT to the finance sector have been worst hit by the credit crunch and the resulting downturn. In its recent fiscal first quarter results for the period ended 28 September, Sun recorded a $1.7bn loss.
Revenues for the quarter also dipped 7% to $2.99bn as demand slowed among customers on both sides of the Atlantic.
The reductions announced today will take Sun's global employee base to around 28,000.