Mass Sun Microsystems Layoffs

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Sun Microsystems Inc. will fire 9% of its employees as demand for big computers, already slumping from the Internet and telecommunications collapses, slowed dramatically after the Sept. 11 terrorist attacks.

These are the first significant layoffs at the Silicon Valley powerhouse and mark the end of an amazing growth spurt for the maker of workstations and high-end servers that run computer networks used by many dot-com firms and big corporations.

The Palo Alto-based company said Friday that it will shed 3,900 of its 43,200 workers. About a third of the layoffs will be in the San Francisco Bay Area.

Sun said it will miss consensus Wall Street estimates of a 4-cents-per-share loss in its fiscal first quarter ended Sunday, as sales fell to about $2.8 billion from more than $5 billion a year ago. Sun executives said they expect to report a loss of 5 to 7 cents a share for the quarter.

Sun said the cuts will reduce quarterly expenses by at least $125 million, and it hopes to return to profitability in the quarter ending in June. After the layoffs are completed, Sun will need revenue of about $3.5 billion to break even.

Sun hired nearly 12,000 workers in the last two years as demand surged for its servers, which were popular with customers that needed to beef up their online operations.

Even as Sun’s sales growth slowed and rivals cut their payrolls, the company avoided job cuts. Other computer firm success stories, from Cisco Systems Inc. to Dell Computer Corp., have cut thousands of jobs this year