Bowing to “economic realities," server and storage maker Sun Microsystems said Friday that it is cutting as much as 18 percent of its workforce in a move to save $700 million to $800 million per year.

In mid-morning trading, shares of Sun slid $.05, or 1.2 percent, to $4.03.

In announcing the reduction of 5,000 to 6,000 jobs, or 15-18 percent of the workforce, Sun also said that Rich Green, executive vice president of software, has left the company. Sun said it expects to take charges of $500 million to $600 million over the next 12 months related to the restructuring and begin realizing cost savings in the third quarter of fiscal 2009.

"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 - from MySQLTM to Sun's latest Open Storage offerings," Chief Executive Jonathan Schwartz said in a prepared statement.

Sun, whose stock has tumbled 81.3 percent from its 52-week high of $21.60, has seen its market share of the corporate server market shrink as it competes against rivals like Hewlett-Packard and IBM.

On Thursday, S&P Marketscope reiterated its “sell” rating in Sun in a research note.

“We expect intensifying competition in server markets to pressure margins, offsetting some benefits we expect from restructuring,” the report said.

As part of the restructuring, Sun said it was realigning its software business groups into: applications platform software, which will focus on open-source applications, such as the company’s MySQL database software; systems platforms, which will provde computing, storage and networking systems, and cloud computing and developer platforms, which will work on web-based software, such as Sun’s StarOffice suite, a rival of Microsoft Office.

In October, Sun posted first quarter revenue of $2.99 billion, a 7.1. percent decline from the prior year’s quarter. Net loss was $1.67 billion, or $2.24 per diluted share.