Sun is undergoing restructuring that will result in a workforce reduction of approximately 3,300 people. The company also reported preliminary third quarter revenues of approximately $2.65 billion, however the company will be incurring a non-cash charge of $350 million for an increase in the valuation allowance for deferred tax assets. Sun's Jonathan Schwartz has also received a promotion to the position of President and Chief Operating Officer.

Scott McNealy, chairman and chief executive officer of Sun, added, "We are resizing the company to better align our cost structure. Network Computing solutions that solve our customers complex computing problems remain our focus. Continued execution of our strategies will pay-off in revenue generation over the long-run. We are well positioned with the strongest product portfolio in years, a substantial cash and market position, strong channels and partners, and a growing pipeline of customers who are demanding more Sun products and solutions."

The restructuring and headcount reduction will result in Sun recording a total charge of approximately $475 million, which the company will spread over several quarters. This includes a $200 million charge in the third quarter for workforce and real estate restructuring. Excluding these one-time charges, on a non-GAAP basis, Sun expects to report a net loss of between $200 million and $260 million for the third quarter.

Steve McGowan, chief financial officer and executive vice president, Corporate Resources, Sun, said "These actions are confirmation of our commitment to continue reducing our cost structure, and with execution on our technology and sales strategy, position the company to achieve our financial goals in fiscal year 2005. We have financial strength as evidenced by our cash generation this quarter and our cash and marketable debt securities balance of approximately $5.5 billion."

Jonathan Schwartz, as part of his new position, will report directly to McNealy. All functions of Sun will report to Schwartz, except for the HR, corporate resources and finance, and the office of the chief technology officer. A successor to Schwartz's recent position of VP of software will be appointed shortly.

"I'm excited to announce Jonathan's appointment to president and chief operating officer," said McNealy. "Jonathan has demonstrated a passion for disruptive innovations that unleash new customer value, creating new opportunities for Sun and altering the IT landscape. He brings strategic and operating experience, and inspirational leadership to this role that will drive Sun to growth and profitability. Today's announcement demonstrates the depth of the bench at Sun and our continued succession planning." [...read more...]

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