IBM-Sun Microsystems merger could mean more job cuts in Colorado

The expected merger of IBM Corp. and Sun Microsystems Inc. — two of Colorado’s largest tech employers — could bring more industry layoffs to the Denver area.

Bloomberg News and the Wall Street Journal report that a nearly $7 billion IBM deal to acquire Sun should be announced Monday.

Such mergers almost inevitably prompt layoffs, and any elimination of redundant jobs could hit Sun and its Broomfield campus harder locally than IBM, said James Staten, an industry analyst with Cambridge, Mass.-based Forrester Research.

“I would think Broomfield has a pretty big target on its back,” he said.

Armonk, N.Y-based IBM (NYSE: IBM) employs about 3,000 workers at its northeast Boulder campus. Santa Clara, Calif.-based Sun (NASDAQ: JAVA) employs roughly 2,200 at its Broomfield offices. They are the largest private employers in their respective counties.

The large presence of Sun data-storage work at its Broomfield campus could make it a place where IBM looks to trim, Staten said.

Sun purchased Louisville-based Storage Technology Corp. in 2005, taking over that company’s data storage products and work force. IBM has its own data storage line and sales force.

Big Blue will want to keep a lot of Sun’s data-storage sales force because the company’s installed customer base is different from IBM’s, Staten predicted. But a combined IBM and Sun won’t need so many workers in data-storage product development, and that’s an area where IBM is likely to cut, he said.

Staten doubts Sun will bare the entire brunt of any cutbacks. IBM will want to use of a lot of Sun’s talent, he said.

“But that won’t be easy — culturally, they’re very different companies,” he said.

IBM is known to expect innovation to arise out of a formalized, collaborative and somewhat hierarchical process, while Sun is famous for its freewheeling approach to innovation driven by individuals. IBM also lets the services it sells to businesses steer product innovation, while Sun typically innovates new products and tries sell services around them, Staten said.

Sun’s work force at its Broomfield campus has shrunk to about 2,200, down from a high of about 4,700 immediately after the StorageTek purchase four years ago. Some 227 local Sun workers have been let go in Broomfield this year.

IBM has laid off an unknown number of workers this year as it sent more of its global services work to India. The company has never revealed how those cuts affected its northeast Boulder campus, but the site is one of IBM’s main global services hubs.

Other recent metro-area layoffs in the tech industry include 187 laid off in January from hard-drive maker Seagate in Longmont. Broomfield-based Level 3 Communications Inc. (NASDAQ: LVLT) laid off dozens from its headquarters in December, part of 450 jobs it cut nationally.

Denver-based Qwest Communications International Inc. (NYSE: Q) cut 1,200 jobs in the final three months of 2008, many of them local.