Sun is laying off 15 percent to 18 percent of its staff as part of a restructuring plan aimed at saving $700 million to $800 million a year, and its top software executive is leaving the company.
The cuts will affect between 5,000 and 6,000 employees. Sun is also reorganising its software division, a move it said stands as "a recognition of the comprehensive role software plays in the company's growth strategy."
In addition, Sun said that Rich Green, the company's executive vice president of software, has decided to leave the company. Sun said Green "has been an instrumental force in evolving Sun's Software strategy and successful business execution across its diverse portfolio."
Sun's software division changes include a new group, Application Platform Software, which includes Sun's MySQL database and infrastructure technology like the GlassFish application server.
The Cloud Computing & Developer Platforms group will focus on Web-based services as well as Sun's NetBeans development platform. Also, Sun's Solaris, virtualisation and system management software teams will be moved into the company's systems group.
All changes are effective immediately, Sun said.
Sun said the economy sparked the changes.
"Today, we have taken decisive actions to align Sun's business with global economic realities and accelerate our delivery of key open source platform innovations," CEO Jonathan Schwartz said in a statement.
At the end of October, Sun blamed the downturn in the financial sector for a $1.68 billion quarterly loss. The collapse of Wall Street over the last two months eliminated several key Sun customers.
(Additional reporting by Marc Ferranti in the IDG News Service New York bureau.)