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By | Timothy Prickett Morgan 30th March 2009 13:58

Rumour: Sun pink slips to fly today

Move to channel sales costs jobs

The word on the street this morning is that the second part of the 5,000- to 6,000-person layoff by struggling server and operating system maker Sun Microsystems will kick in today.

The layoff, which was announced back in November, aims to remove $700m to $800m in costs from Sun's books, and will cost somewhere between $500m and $600m. (Sun had previously announced a layoff of between 1,500 and 2,000 employees back in May 2008.) The November layoffs resulted in pink slips starting in December, with Sun closing its manufacturing operations in Linlithgow, Scotland, and giving the sack to 130 people. The company is consolidating the manufacturing of servers and storage in its Hillsboro, Oregon, facility.

Oddly enough, even with layoffs earlier in the year, Sun's payroll actually grew in its fiscal second quarter ended in December 2008.

In late January, about 1,300 people were let go as part of the November layoff round, reportedly cutting across all employee levels and all product lines.

Today's rumoured layoff is a much bigger cut, and the scuttlebutt is that Sun is aiming for that 6,000 layoffs figure. That would put Sun's payroll after the layoffs at around 28,800 employees worldwide.

There is some talk that Sun's direct sales force is seeing redundancies, which seems crazy given Sun's desire to push servers, storage, software, and services to enterprise clients, but this rumour could be true given that Sun has been trying to shift to more channel sales in the past year. One rumour has it that the whole New York sales office - which mostly caters to the financial services and media industries - has been closed.

The layoffs come as unconfirmed speculation continues that Sun will be acquired by rival IBM for somewhere around $8bn. Neither Sun nor IBM have publicly discussed the rumours, unless you count the leaks that are probably coming indirectly out of Big Blue to the Wall Street Journal as trial balloons to see what Wall Street and IT shops think about the possible deal. ®

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