Sun Execs Upbeat Despite 2Q Loss

Printer-friendly version Email this CRN article

Sun Microsystems executives said the company took share from its major competitors in its most recent quarter and remained upbeat despite a difficult economic environment.

For its second quarter ended Dec. 30, Sun recorded $3.11 billion in revenue, a 39 percent decrease over the same quarter last year, but a 9 percent increase over the first quarter. Sun reported a loss, prior to various charges, of $99 million, or 3 cents per share, a 121 percent decline over the same period last year, but a 40 percent improvement over the first quarter.

Including charges, which were mostly included restructuring costs, Sun lost $431 million, or 13 cents per share.

The sequential increase in revenue, earnings and bookings marked the first time those financial indicators rose sequentially in a year, Sun executives said.

"Despite the difficult [economic climate we are very pleased with the quarter," said Sun President and COO Ed Zander, in a conference call to discuss the results early Friday. "We restored predictability in the management of our business."

Zander also said Sun reduced its inventory by 26 percent in its most recent quarter and that channel inventory reached its lowest level in two years. Sun is also making progress against Microsoft and taking share from IBM, Zander said.

Scott McNealy, Sun's chairman and CEO, said that while the company may not be doing as much business with its traditional telecommunications and dot-com customers, Sun is winning business in new areas such as retail, government and life sciences.

"We have a lot of telco and dot-com customers who just aren't buying," McNealy said. "But we were still able to post good results with design wins [in these new areas." He added that Sun's more recent wins are greater in number than the traditional business, but smaller in size.

McNealy would not comment on when he expects the overall economic climate to improve, but said Sun is well-positioned.

"This company took advantage of the bubble big time," he said. "We built a cash horde of $6 billion and funded an entire new product line that we launched. We managed on the upswing and downswing as well as anybody in the business."

Sun expects to return to profitability in the June quarter.

In Friday morning trading, Sun shares were off less than 1 percent to $12.26 per share.

Printer-friendly version Email this CRN article