In an open letter to Sun Microsystems chief executive Scott McNealy and board members, computer hardware analyst Steven Milunovich called on the company to make thousands of job cuts and eliminate certain product lines.

"Sun faces a crisis," the analyst wrote.

"On its current course, we believe Sun is likely to suffer further shares and financial losses, become irrelevant to most users, and eventually be acquired for its installed base."

Sun shares declined 2.2 percent to 3.18 in morning trade.

Shares have dropped 30 percent in the past three months, most recently due to a financial warning and a one billion dollar restatement of past results.

"Sun must become profitable quickly, so headcount reductions are unavoidable; 5,000-7,000 seems a ballpark number," Milunovich said

The analyst added that Sun, a company involved in hardware, software and services, should sharpen its focus.

"We think there is a place for Sun as a mission-critical computing vendor adding value in operating software as well as in systems architecture and management," he said.

"We understand Sun's car analogy that users don't want to buy parts but a whole car. The problem is that much of Sun's business is going into overshoot, which means a modularizing architecture."

Milunovich said that although Microsoft is seen as the company's chief rival, "the daily sales battle is against IBM, HP (Hewlett-Packard), and Dell."

SPACE.WIRE