Sun Microsystems skids to $209 mn quarterly loss

Sun Microsystems skids to $209 mn quarterly loss
AP
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First Published: Wed, Jan 28 2009. 11 11 AM IST
Updated: Wed, Jan 28 2009. 11 11 AM IST
San Francisco: Sun Microsystems Inc. skidded to a loss of $209 million in the latest quarter, dragged down by a big charge for job cuts and falling demand for servers and data-storage machines.
Still, Sun’s shares jumped 5% in extended trading because sales topped Wall Street’s tepid forecast.
The results illustrate the challenge facing Sun, in the throes of major layoffs, as it tries to overhaul its business during a recession that has damaged bigger and sturdier rivals. One of those rivals is IBM Corp., whose mainframe and server sales have suffered as corporations chop their technology budgets.
Sun said after the market closed on Tuesday that its loss amounted to 28 cents per share in the latest quarter. In the comparable period a year earlier, Sun had a profit of $260 million, 31 cents per share.
The latest figures were weighed down by a $222 million restructuring charge. Sun, the world’s fourth-largest server maker, revealed in November that it is cutting up to 6,000 of its 33,000 workers over the next year. The cuts will save the Santa Clara-based company up to $800 million a year.
Without one-time charges, Sun said it earned 15 cents per share. The figure didn’t directly compare to analysts’ forecast for a loss of 10 cents per share, because some analysts included charges that Sun excluded.
Sales fell nearly 11% in the latest quarter to $3.22 billion. But that was slightly better than analyst estimates.
The last three months of 2008 were tough for hardware makers.
Sales from IBM Corp.’s hardware division declined 20% during the period. Data storage company EMC Corp.’s sales rose slightly during the latest quarter, but it is laying off 2,400 people, or 7% of its work force, and isn’t giving financial guidance because of the uncertainty of the market.
In the past few years, Sun’s sales have slipped between 5% and 10% from the fiscal second quarter, which ends in December, to the third fiscal quarter, which ends in March.
Sun’s server revenue fell 14% to $1.37 billion in the latest period. Storage revenue fell 13 percent to $570 million.
Consistent profitability has eluded Sun since the dot-com bubble burst in 2000, pulverizing demand for its high-end servers and sending Sun into a brutal slump during which the company lost more than $5 billion. Sun turned a corner, though, pulling together six profitable quarters in 2007 and 2008.
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First Published: Wed, Jan 28 2009. 11 11 AM IST