Sun on track to meet Q3 goals

End of the quarter deals at Sun Microsystems are not closing as the company had expected, but Sun is on track to meet its financial projections for its fiscal third quarter, its finance chief said Thursday in a mid-quarter conference call with analysts.

Orders of its high end servers are "running a bit behind" what the company had planned, said Michael Lehman, Sun's chief financial officer and executive vice president. Some orders came in too late to be recognized in the current financial quarter. Typically about 50 percent of the orders placed are closed in the last four weeks of the fiscal quarter, he said.

Despite this, the company made no changes to its financial outlook for the third quarter, which ends this month. The Palo Alto, California-based server maker said during its second quarter earnings call on Jan. 18 that revenue would be "slightly up" from the second quarter. Sun reported revenue of US$3.1 billion for the second quarter, with an adjusted net loss of $99 million, or $0.03 per share.

"There's no change from what we said earlier," Lehman said.

With the weak economy providing no assistance, Lehman said that Hewlett-Packard Co.'s controversial acquisition of Compaq Computer Corp. could make room for Sun to steal some high-end Unix customers from those two companies.

"It's a great opportunity to get in the door," he said. "It's a very real opportunity for companies to step back and say 'who do I want to partner with ... for the long term.' We and a couple other companies are looking at this potential combination and viewing it as an opportunity to go in a pitch our story."

Offering a glimpse of its products, Sun said that customer adoption of its UltraSparc III line of servers is coming along well. "The ramp continues to build nicely," Lehman said.

Lehman said the company still plans to return to profitability by the fourth quarter, which ends in June, and expects to reduce inventory levels. The fourth quarter could also bring a small reduction in its workforce, he said.

"There are still a significant number of risks that are limiting ... growth in IT spending in the next three months," Lehman said. "We have no doubt that we will exit this period of uncertainty with a stronger company."

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