Sun Microsystems Inc., one of the storied names in computing, might be headed to the brink of extinction during the economic downturn.
The company's servers and software helped stimulate the Internet boom, and its engineering acumen is revered. But Sun never fully recovered from the previous financial crisis – the dot-com meltdown – and it has been steamrolled by big shifts in the way businesses buy their back-end computers.
Now Santa Clara, Calif.-based Sun plans to slash up to 6,000 jobs, or 18 percent of its global work force, as it scrambles to cut costs to offset a devastating slump in sales of its high-end servers. Sales of those machines fell 27 percent in the latest quarter as banks and other big customers went under or couldn't get loans to buy the servers.
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“These are hard but necessary changes,” Jonathan Schwartz, Sun's chief executive, said in an interview Friday as he disclosed the cuts. They sent Sun shares up 4 cents, or 1 percent, to close at $4.12.
Sun also said its software chief, Rich Green, has resigned, as the company splits its software division into three new business groups.
Fidelity Investments, the world's largest mutual-fund manager, will eliminate about 1,700 jobs in the first three months of 2009, adding to dismissals that started this week as it confronts an eroding asset base.
Together, the two rounds of job cuts represent 3,000 employees, or about 7 percent of the company's 44,400-member workforce, Anne Crowley, a Fidelity spokeswoman, said in an interview Friday. No decisions have been made on which divisions will dismiss employees or whether fund managers and research analysts will be affected, she said.
The global market selloff has reduced Fidelity's assets under management this year by about 13 percent, to $1.4 trillion from $1.6 trillion through Sept. 30. Stock and bond mutual-fund assets fell 23 percent to $717 billion in the first nine months, according to Financial Research Corp. of Boston.
Anheuser-Busch Cos. expects to close its $52 billion sale to InBev NV late next week, creating the world's largest brewer, said a person with knowledge of the plans.
The deal moved closer to completion Friday after regulators at the U.S. Department of Justice cleared the acquisition pending a sale of Labatt USA. The person declined to be identified because the information about the transaction's close isn't public.
Investors at both companies have approved the acquisition, worth $70 a share, though regulators in the U.K. and China still must sign off on the sale. The combination will put InBev's Beck's lager and Leffe Belgian ales together with Anheuser-Busch's Bud Light, Budweiser and Michelob brands to form a brewer with more than $36 billion in revenue.
InBev has commitments from 19 lenders to provide $45 billion in financing to buy the 156-year-old St. Louis-based brewer. InBev, based in Leuven, Belgium, postponed a $9.8billion stock sale aimed at paying off merger debt, it said Oct. 14. The company will wait for markets to stabilize, it said.
Citigroup Inc. chief executive officer Vikram Pandit sought to reassure employees after the stock tumbled this week.
In a memo, Pandit, 51, said he'd hold a “town hall meeting” Monday morning in New York to discuss “our accomplishments over the last 11 months and why despite the major challenges currently facing our industry and the economy I continue to be optimistic about the future.”
Citigroup, the fourth-biggest U.S. bank by market value, slumped 19 percent in New York trading this week and is down 68 percent this year, after four straight quarterly losses totaling $20 billion. The board Thursday was forced to issue a statement in support of Chairman Win Bischoff after the Wall Street Journal reported that some directors were frustrated by the company's performance and considering replacing him.
A Dow Jones spokesman said that the Journal stands by its story.