x Abu Dhabi, UAEWednesday 26 July 2017

Sun not to set on Middle Eastern operations

Sun Microsystems is to shed up to 6,000 jobs worldwide but Middle East operations are unlikely to be affected.

The Middle Eastern operations of Sun Microsystems are unlikely to be affected by a global restructuring plan that will see the company shed up to 6,000 jobs. Sun, one of the world's largest computer systems companies, revealed last week that it would aggressively cut jobs and streamline operations to remain profitable in a deteriorating economic environment. But the company's Middle East managing director said yesterday that it was "business as usual" for the region. "We are still growing here," said Chris Cornelius. "I don't believe that we will be immune from what is happening - we are not in a cocoon, we are a part of the wider world - but the impact here will be lower. Customers here are not stopping projects or cutting orders, they are just being cautious." The Sun chairman and co-founder, Scott McNealy, visited the GCC in September, giving a keynote address at the Gitex conference in Dubai and meeting partners and customers in Saudi Arabia, where demand for IT services is booming. "Scott is very bullish about the region," Mr Cornelius said. "He is giving us a lot of support." Sun's Middle East business employs about 160 people, with a roughly even split between sales and technical staff. Its revenues grew by 16 per cent last year; revenues globally grew by 0.1 per cent. Sun's announcement of major job and cost cuts came in a week where the technology industry began to show the signs of being significantly affected by the global economic crisis. Nokia, which produces almost half the world's mobile phones, said demand for new handsets would drop next year, something that has happened only once before in the company's history. Cisco Systems, the world's largest maker of networking equipment, warned that its revenues could drop by as much as 10 per cent if the coming quarter was as bad as expected. The research group IDC expects sales of personal computers to drop in the final quarter this year. Like mobile phones, sales of computers have almost never experienced quarterly decline. One major concern among companies selling technology products to businesses is cuts in next year's corporate budgets. Many IT buyers are still operating on this year's budgets that were finalised in the late months of last year, when few expected the full extent of a financial crisis that was still largely limited to mortgage-backed securities. Analysts believe that in budgeting for next year, IT spending will be cut back, or held steady at best. In the GCC, spending by government-backed companies is often linked directly or indirectly to oil revenues, with governments budgeting to sell oil at a baseline price and income from prices above this level being invested by state-owned businesses and funds. While official figures are not publicly available, ratings agencies and the International Monetary Fund have estimated that the UAE budgets for oil at less than US$50 per barrel. As oil prices plunge, the funds available for investment are likely to drop. "Some of our customers in business and government have said that they have the budget to spend," said Mr Cornelius, "but they are holding back, just taking an assessment of how deeply this thing will affect them." tgara@thenational.ae