Sun’s (SUNW) Shares Don’t React To Job Cuts

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Sun (SUNW) filed a document with the SEC that indicated that it would make more job cuts. About a year ago, Sun fired almost 5,000 people, about 12% of its work force.

Sun’s shares were flat on the news The company said that it intends to take charges of $100 million ot $150 million for the cuts.

The company’s shares might have gone up on the filing. In the last quarter, sales for the server company were flat, but the company had a small net income, mostly due to cost savings. Further work force reductions might drive better margins.

But, Wall St. seems to have seen through that smoke. If Sun’s revenue is going to recover, it cannot continue to lay off staff. At some point it will have to get down to a core level of personnel if it plans to sustain growth.

More departures often mean that a company doesn’t believe that it can expand in future quarters.

Douglas A. Mcntyre