Sun Microsystems Inc, the fastest-growing maker of server computers that run corporate networks, reduced fiscal fourth-quarter sales and profit forecasts for a second time as clients scale back purchases.
The company's shares fell as much as 7.2 percent after it said profit will be US$0.02 to US$0.04 a share in the period ending June 30. Analysts expected US$0.06 cents, the average estimate in a poll by First Call/Thomson Financial. Sales will be US$3.8 billion to US$4 billion, down as much as 7.2 percent from the previous period.
Sun's sales soared in recent years as the company supplied servers and related equipment to Internet companies. Now, Sun's large, established customers have reduced spending as economic growth slows, and once high-flying, start-up clients are selling barely used Sun products at auctions as they try to raise cash. That's left Sun beaten on both sides.
Sun shares fell as low as US$17.32 after the report. The stock has lost 49 percent of its value in the past 12 months.
The Palo Alto, California-based company blamed much of the shortfall on fresh difficulties in Europe, where executives are starting to postpone spending.
"Demand in the US is still less than we expected," Chief Financial Officer Mike Lehman said on a conference call. Parts of Asia and Europe are also being affected, he said. "Demand in Europe has really tailed off more than what we thought." When the company reported third-quarter earnings on April 19, Lehman said fourth-quarter sales would rise slightly from the prior period and earnings would be "flat to slightly down."
The biggest risk to that prediction had been Europe, and the fallout there isn't that surprising, analysts said. European sales will continue to falter, so Sun could have another quarter or two with little revenue growth, Bracelin said.
In the year-earlier period, Sun's net income was US$720 million, or a pre-split US$0.42 a share, on sales of US$5.02 billion.
Excluding a gain and acquisition-related costs, profit would have been US$659.5 million, or US$0.39 cents before the company's December 2-for-1 split.
Sun will cut US$80 million in costs this quarter from the period ended in March, Lehman said. He declined to comment on the outlook for fiscal 2002.
The company will report final results for the period July 19.
RSS