Sun, once one of the world's dominant makers of high-end servers, employs about 650 people in Australia and as many as 120 positions
there could be under threat after the multinational announced late last
week it would lay off up to 18 per cent of its workforce.
The redundancies are a response to plummeting equipment sales that
have followed Wall Street's mid-September meltdown.
In Australia, Sun Microsystems is yet to learn how the cost-cutting
push will play out, but local managing director Duncan Bennet said
that the subsidiary was yet to witness an abrupt change to corporate
"We've got people head down doing business and there is still business
being done," Mr Bennet said. "IT is not a discretionary cost for a lot
of companies so big IT projects are going to continue."
Australian companies such as Qantas and Suncorp have confirmed they
are reprioritising computing projects and reducing their use of
information technology contractors in response to the worsening
However, a number of vendors that compete locally and overseas,
including Sun, SAP and Mincom, have said they haven't seen in
Australia the abrupt softening of business that has triggered a host
of earnings downgrades in the US.
Mr Bennet said issues such as excess inventory that had hurt IT
vendors badly in the dotcom bust weren't as prevalent today.
"Certainly we don't have any inventory exposures here, none at all. In
fact the supply chains at Sun . . . have come a long way and become
very, very efficient."
Mr Bennet's comments came as Sun filed its financial accounts for the
year to June 30 with the Australian Securities and Investments
The company reported a sharp rise in net income from $1.6 million a
year ago to $18.6 million as it cut costs and booked a $6.9 million
gain on the integration of its operations with those of acquisition
StorageTek Australia and New Zealand.
Mr Bennet said revenue dropped from $567.8 million a year ago to
$462.1 million as the benefits of a large, one-off order linked to
Telstra's information technology transformation faded. Sun's local
revenue in the year to June 30, 2006 was $392.2 million.
"We're delighted with the results. We made our internal revenue goal
and we made our internal profit goal," he said.
"There were some efficiencies in depreciation, we used fewer contract
resources, administration and consulting fees were down $4 million . .
. and if you look at the salary costs they were almost flat year on
Mr Bennet declined to discuss the company's growth expectations for
its 2009 financial year.
But he said Sun would look to its portfolio of low-cost, open-source
software products to spur sales to cost-conscious customers.
Australian Financial Review, Fairfax Business Media
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