Sun warns of earnings dip in current quarter

Industry bellwether Sun Microsystems Inc. Wednesdaywarned investors of a possible loss in the current quarter because of weak sales in Europe and Japan.

In a mid-quarter conference call with analysts this afternoon, Sun's chief financial officer, Michael Lehman, said the company is unlikely to reach the US$3.7 billion revenue target Sun had previously said it would need to break even this quarter.

"I think it is going to be a real stretch at this point to hit $3.7 billion" based on demand and sales in the first two months of the quarter, Lehman said.

According to Lehman, demand for Sun's high-end server and workstation products in the U.S remained consistent with its own expectations.

Responding to analysts' questions, Lehman insisted that Sun was not losing sales to the competition and said the revenue decline was purely the result of the declining economic conditions in the tech industry.

Sun did not release any specific revenue or earnings estimates.

Analysts polled by earnings tracking firm First Call had expected Sun to eke out a profit of around 2 cents a share on revenues of $3.8 billion.

A month ago, Sun announced that it would be cutting approximately 300 jobs by the end of the year. That move followed from the "redeployment" of about 872 workers, of which Sun said, about 300 would not be able to find work elsewhere in the company (see story).

Also in July, Sun disclosed that its fourth-quarter revenue fell 20 percent during the fiscal period that ended June 30. Revenue for the quarter was $4 billion. That compared with $5.02 billion in the fourth quarter of fiscal 2000.

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