Sun's profits melt away

Schwartz: US economy presenting significant challenges

Hardware giant Sun Microsystems said it would cut between 1,500 and 2,500 jobs today after the credit crunch hit profits badly.

Sun reported a fiscal third-quarter net loss of $34m (£17m) compared with net income of $67m a year earlier.

Sun shares plunged 15 per cent after the announcement.

"The US economy presented Sun with significant challenges in the third quarter, masking our progress in developing nations and economies across the world," said Jonathan Schwartz, chief executive of Sun Microsystems.

Sun also blamed the losses on charges related to the $1bn purchase of Swedish open-source database software maker MySQL in February, which reduced net income by about 4c per share, as well as higher tax bills.

The job cuts will represent as much as 7.5 per cent of the company's 33,500 strong workforce. It was not clear whether the UK workforce would be affected.

Rivals IBM and HP both reported better-than-expected results in their most recent earnings reports, citing strong growth in emerging markets.