Sun Narrows Q3 Losses
Revenue was $2.625 billion, a 1 percent decline from $2.651 billion in sales in the same period last year. The Q3 loss included the favorable impact of $54 million in settlement income from the Microsoft deal struck a year ago, as well as a $69 billion foreign tax boost and other benefits. Without these one-time gains, the Santa Clara, Calif., vendor would have lost 2 cents a share, missing the break-even estimates of analysts polled by Thomson/First Call.
The results continue Sun's four-year struggle to sustain profits -- or even turn a profit at all. Despite its less-than-stellar quarterly results, Sun executives maintain that the company is on the right track.
During Thursday's earnings conference call, Sun Chairman and CEO Scott McNealy said Sun does not plan additional cost-cutting measures, and believes the company will turn itself around.
"All of this is moving the company in the right direction," McNealy said. "There's not a lot more we can do, and we're going to continue the 30-plus projects we have in gear to reduce our cost structure, give us more flexibility and get more efficient on the spending side."
Moreover, McNealy said customers are no longer worried about Sun's longterm viability and are now showing more interest in the products and solutions the vendor offers.
"What has gone away in the marketplace is [the question], 'Are you going to make it?'" McNealy said. "That question doesn't get asked anymore."
Executives also were optimistic that a raft of new products Sun plans to make available later this year -- including its long-awaited, dual-core AMD Opteron-based Galaxy server line and the release of Solaris 10 to the open-source community -- will spell gains for Sun.
"The Solaris 10 stuff has everybody very, very excited," McNealy said. "I've often been accused of overpromoting things. I don't think we can overhype the enthusiasm [around this]. It really does drive significant utilization."
Sun's x86 server was a bright spot in Thursday's earnings report. That business was up 196 percent year over year, while Sun's $1.68 billion quarterly product business overall was down 1.8 percent.