Sun Microsystems’ plan to cut 11-13% of its workforce ran into skepticism on Wall Street Thursday.
Shares of Sun
slipped 1.7% on a day when the Nasdaq gained 1.9%. The consensus opinion of Wall Street analysts appeared to be that the job cuts and other measures didn’t go far enough to return the company to consistent profitability, given the trend toward low-cost commodity hardware. Some were looking for job cuts of 12,000 or more, compared to the 4,000-5,000 announced by Sun.
Sun lost about $500 million in the last three quarters on more than $9 billion in revenues. The company had $2.9 billion in cash and $1.1 billion in debt at the end of March.
UBS analyst Benjamin Reitzes — one of the few analysts to rate Sun a ‘buy’ — said Sun may be open to further cuts to meet its goal of 10% margins.
The broader market soared Thursday on strong retail sales reports. The Labor Department will issue its monthly jobs report Friday morning, an important measure of inflation.
The Nasdaq soared 41 to 2219, the S&P 500 climbed 15 to 1285, and the Dow rose 92 to 11,260. Volume declined to 2.46 billion shares on the NYSE, and 2.2 billion on the Nasdaq. Advancers led 25-7 on the NYSE, and 22-8 on the Nasdaq. Upside volume was 84% on the NYSE, and 81% on the Nasdaq. New highs-new lows were 71-73 on the NYSE, and 101-45 on the Nasdaq.
gained 4% after beating estimates.
gained 3% on a CIBC upgrade.
tumbled 14% on its results.
lost 13% on a stock option probe.