Sun has fiddled with its poison pill, suggesting that it might be looking for a buyer. It did not expand on the pill's dissolution in the hastily arranged conference call that went with the announcement, but in a press release it explained that any new poison pill would take shareholder approval unless the board deemed it absolutely necessary. Sun also amended its bylaws so that directors are elected by majority vote in uncontested elections

The changes accompanied announcements of 4,000 to 5,000 layoffs in the coming six months. The cuts in current personnel will be heavier than it may look because the calculations include Sun hiring some unspoken number of some species of technical folk, according to Sun CEO Jonathan Schwartz (pictured). Schwartz said who exactly is going to be terminated hasn't been decided yet.

Considering that the object of the overall exercise is to get operating income to 4% of revenues in the year that starts in July and 10% of revenues in the year after that, Wall Street was dubious Sun could do it and wanted to know if there were secondary headcount reductions in the plan. Ultimately Schwartz didn't say no, but by way of rating the move Sun's stock dropped close to 4% Thursday but improved as time went on.

But again, Sun is famous for not cutting as deeply as it ought by Wall Street standards.

Sun lost $217 million on $3.18 billion last quarter. It has also grown famous for losing money the last few years.

The plan for fiscal '07, which begins in July 1, 2006, calls for revenue growth in the low to middle single digits, another dubious prospect according to Wall Street without deeper layoffs, along with a gross margin of 43% and operating expenses of $5.6 billion to $6 billion, excluding any restructuring. Schwartz is figuring on being cash flow positive in fiscal '07, but the priority will be margins.

Schwartz touched on R&D, a huge expense at Sun, and said something about terminating non-core or redundant R&D, letting some of it out to business partners and leverage it across product lines, but without any numbers or specifics. "The era of custom hardware is over," he said.

He also spoke of simplifying the product line and the supply chain as though Sun was going to come down to its Niagara boxes, StorageTech's archiving, the prospective Thumper two-way Solaris 4U due out this month and Java, described as core IP, though Sun has promised to open source it.

"We've worked hard to reinvent the entirety of Sun's product line, from software to systems, storage and services," Schwartz said. "It's on the rebuilt foundation that we are reinventing our business model on a far simpler base."

The company is also apparently going to be redirected. Schwartz said, "Our industry is littered with companies that are trying to be all things to all people" and that Sun was going to pursue accounts that held the Internet and network computing as core.

(The original version of this story was published by Client Server News.)