Sun to shut down for a week in July

P>SAN FRANCISCO: Sun Microsystems Inc. will shut down for a week in July to cut costs, asking employees to take holidays or unpaid leave, Sun said in a letter to employees obtained by Reuters on Wednesday. The closure at the network computer maker, which unlike many competitors has not announced layoffs since an economic slowdown hit the United States last year, will affect the four business days in the first week of July.

This marks the first time that Sun has taken such action. "All US Sun offices will be shut down during the first week of July," which includes the July 4 holiday, the letter to employees said, adding that essential services, such as customer support, would not be affected.

"This holiday shutdown, and our other cost cutting measures, are included in our efforts to avoid more drastic measures," the letter said. Sun, which has seen runaway sales growth slow to a relative crawl as US technology spending slowed, said last week while reporting results that it was pursuing tough cost controls in order to preserve funding for research and development.

However, some analysts have said that Sun will have difficulty finding new major sources of savings after months of trimming back. Computer and printer maker Hewlett-Packard Co., which is implementing cost controls of its own, has also asked employees to take off days of accrued vacation as a way to reduce expenses.

Sun shares dropped $1.03, or more than 6 per cent, to $16.05 on the Nasdaq, falling farther than many peers in a mixed market for technology stocks.

(C) Reuters Limited 2001.