Sun Loses $2.3 Billion In Fiscal Second Quarter

For the three months ended Dec. 29, Sun lost 72 cents per share on sales of $2.9 billion. That compares with a loss of $431 million, or 13 cents per share, on sales of $3.1 billion in the same period last year.

Excluding a one-time $2.13 billion expense related to goodwill impairment, $357 million for previously announced restructuring and other items, the company would have earned $10 million, or break-even status on a per-share basis. Excluding special items a year ago, Sun said it would have lost $99 million, or 3 cents per share.

Analysts were expecting Sun to post a second-quarter loss of 2 cents per share on sales of $2.9 billion, according to Thomson First Call.

"The Sun team put in a solid performance this quarter," said Sun CEO Scott McNealy. "We delivered sequentially quarterly revenue improvement, lower costs and better value to customers, and growth in key business."

The company did provide any guidance during its last earnings report in October.

Sun's systems helped power much of the growth of the Internet during the high-tech boom. It was hit hard when many customers, including countless dot-coms, went out of business during the tech downturn that began in March 2000.

Its proprietary Unix-based equipment also now competes with companies that sell increasingly powerful servers built on less expensive chips and software.

Still, Sun executives say the company continues to gain market share among companies that sell Unix-based servers. Sun also has branched out and started offering servers that run the inexpensive Linux operating system.

Sun also is battling Microsoft in a $1 billion private antitrust lawsuit. Sun claims Microsoft used its monopoly to stifle its Java programming platform, which would allow software to run on any system regardless of its operating system.

U.S. District Judge J. Frederick Motz on Wednesday gave Microsoft 120 days to release a version of Java for the Windows operating system. It's not expected to have a material impact on Sun's business in the immediate future.

Shares of Sun lost 17 cents, closing at $3.70, in Thursday trading on the Nasdaq Stock Market.