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News > Technology
Sun plans shutdown
April 25, 2001: 2:52 p.m. ET

Network server supplier will halt operations for four days to trim costs
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NEW YORK (CNNfn) - Faced with a sharp and sudden slowdown in its end markets, Sun Microsystems is planning to close its offices during the first week of July as part of an effort to reduce operating costs.

A spokeswoman for Sun, a leading supplier of network servers, said the company sent an internal e-mail to employees Wednesday telling them they must request vacation pay for those days, or go without pay.

That week, which is the beginning of Sun's new fiscal year, also includes the July 4 holiday, so technically it is a four-day shutdown, not a full week, the spokeswoman said.

The move is part of a broad cost-cutting initiative at Sun, which has been particularly hard hit by the global slowdown in technology spending. Executives have promised to trim the company's general and administrative expenses and slow the overall rate of hiring.

Sun is the leading supplier of mid-price range UNIX servers, so-named for the operating system they run. And on top of the general slowdown that has weighed on the entire technology industry, Sun has been facing increasing competition in the market for mid-range servers during the past year as well as difficult product transition.

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Other companies, including IBM and Hewlett-Packard have stepped up their efforts in the mid-range UNIX server market. Sun executives said pricing pressure from its competitors, as well as the transition to Sun's new mid-range servers, called Sun Fire, weighed heavily on the company's bottom line during the last quarter.

The company introduced the new Sun Fire systems, which are built around the company's hotly-anticipated and oft-delayed UltraSparc III microprocessors and run the latest version of Sun's Unix operating system, in late March.

Last week, the company reported a fiscal third-quarter profit that was in line with the company's recently reduced target but fell sharply from the same period a year earlier. Executives also said revenue and profit during the current quarter will fall far below recent expectations.

Shares of Sun (SUNW: down $0.95 to $16.13, Research, Estimates) were down more than 6 percent in afternoon Nasdaq trade Wednesday. The stock has fallen more than 75 percent over the past year from a high of $64.65. graphic





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