Sun Microsystems skids to US$209m fourth-quarter loss


Thu, Jan 29, 2009 - Page 5

Sun Microsystems Inc skidded to a loss of US$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 percent 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 US$0.28 per share in the latest quarter. In the comparable period a year earlier, Sun had a profit of US$260 million, US$0.31 per share.

The latest figures were weighed down by a US$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 US$800 million a year.

Without one-time charges, Sun said it earned US$0.15 per share.

The figure didn’t directly compare to analysts’ forecast for a loss of US$0.10 per share, because some analysts included charges that Sun excluded.

Sales fell nearly 11 percent in the latest quarter to US$3.22 billion. But that was slightly better than analyst estimates.

“While things were certainly on paper better than what Wall Street had forecast, I’d be hard pressed to try to say that the fundamentals are improving at Sun,” said Brent Bracelin, an analyst with Pacific Crest Securities.