Daily Debrief: The Sun sets for 6,000 employees Video

Daily Debrief: The Sun sets for 6,000 employees Video Transcript

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>> Welcome to the Daily Debrief. I'm CNET's Kara Tsuboi, here with CNET News Senior Reporter Dawn Kawamoto. And Dawn before the bell this morning, Sun Microsystems announced a less than good news for their employees. What don't you explain?

>> Yes, they announced that they're gonna restructure their operations, they are gonna end up cutting 6,000 jobs. I mean, ironically just last week, I had Ron Baker [assumed spelling] telling me the rumor on the street was that Jonathan Schwartz himself, the CEO of Sun would be the one to go.

>> Wow.

>> But instead it looks like it's the 6,000 employees.

>> So, 6,000 jobs, that's about 18 percent of the workforce, is that right?

>> Correct, 15 to 18 percent.

>> Okay.

>> Analysts -- you know, one analyst was saying that they recommended, they thought Sun needs to go as deep as 20 percent.

>> Wow.

>> You know, just take the knife deeper, do it once, get it over with. This one analyst complained about Sun. He said, historically, it's been very slow to do as deep of cuts as it does.

>> Sure.

>> And so it keeps trickling these out.

>> Oh, god. Wouldn't it just be painful for employee morale, I'm sure.

>> Right, but you know as what's going on to the rest of Silicon Valley and nationwide is completely they're just cutting left and right.

>> Absolutely. Do this come as much surprise given that we saw what happened to Intel, what happened to Cisco in the last couple of weeks.

>> I would say probably not. I mean given what we've seen to other companies and also Sun, they had done a pre-warning of their quarter. It was gonna be a lot less than they thought it would. So, you know that in itself, kind of, you know put the writing on the wall in some way, so I would imagine the employees weren't too surprised.

>> So what is next for this company? I mean, do they just kind of hope they can weather the storm or hope to get bought perhaps.

>> Well, I'm sure that they can maybe do both, maybe.

>> Right.

>> Maybe weather the storm or maybe get bought.

>> Sure.

>> But, you know in terms of what bankers are saying about getting bought, you know Sun right now is -- it's a steal. It is a great deal. It's like, you know 1.3 of trailing dollars like you know, HP, Microsoft, IBM or like, you know more than twice that amount, you know, in terms of value to buy the company. So it is, you know, very cheap right now to acquire the company. You know, whether or not you might see some private equity players, you know, Silver Lake partners, you know which acquired Seagate years ago. Sun acquisition and taking the components of Sun and like, you know honing down to the best core of the company and shooting off reselling the other parts of the business, that's kind of fits into Silver Lake's profile of the acquisition that kind it does, but given the size of what it would take to acquire Sun...

>> Sure.

>> Right now, their market cap is like 3 billion. When you look at their cash and securities it's about 2.6 billion, so, you know it has almost as much cash on hand as what the market value of the company is. So for a little bit more, you know maybe 2 billion more for ...

>> Just a little bit more.

>> Some, you know -- steal, you know, at a minimum it would take to kind of to buy the company it would seem and so, if there were gonna be a private equity kind of situation, you know Silver Lake would perhaps to team up with some other players.

>> Absolutely.

>> You know, to kind of...

>> No one has that kind of money right now it seems.

>> Right.

>> You know, a lot of people, you know, acting very conservatively, so that's the scenario for maybe what, six months out, a year out.

>> It's really hard to say.

>> Yeah.

>> I mean given the market is right now, but yeah.

>> Absolutely.

>> Well.

>> So you had another from the Valley who takes a hit and the news can continue to get worse for Sun Microsystems.

>> Yeah.

>> Thank you so much. Dawn Kawamoto.

>> Sure.

>> I'm Kara Tsuboi, we'll see you in the next Daily Debrief. ^M00:03:26 [ Music ]