[rescue] FW: Sun Microsystems to Cut Jobs, Sees Wider-Than-Expected Loss

[Ken Hansen]

Sun Micro to Miss Estimates
Sun Microsystems warned of a wider-than-expected loss and set plans to cut about 9% of its staff, marking the latest in a string of earnings shortfalls. September sales were hurt by the terror attacks.

Sun Microsystems to Cut Jobs,
Sees Wider-Than-Expected Loss 

A WALL STREET JOURNAL ONLINE News Roundup


PALO ALTO, Calif. -- Sun Microsystems Inc. warned of a wider-than-expected fiscal first-quarter loss and set plans to cut about 9% of its staff.

Sun's announcement marks the latest in a string of earnings warnings in the computer industry. Within the last two days, Gateway Inc. and Advanced Micro Devices Inc. warned of weak results. PC leader Dell Computer Inc., however, reiterated its quarterly outlook, surprising analysts.

Sun said early Friday that it expects first-quarter revenue of $2.7 billion to $2.9 billion, and a loss of five cents to seven cents a share. Analysts surveyed by Thomson Financial/First Call were expecting earnings of four cents a share on revenue of $3.3 billion.

The computer maker earned $510 million, or 30 cents a diluted share, on revenue of $5.05 billion for its year-ago first quarter.

Sun said it also plans to consolidate excess facilities, and expects to record a second-quarter restructuring charge of $500 million. Sun currently has about 43,300 employees.

Michael Lehman, chief financial officer, said in a conference call Friday morning that the Sept. 11 terrorist attacks "significantly impacted" the last two to three weeks of Sun's fiscal first quarter, forcing the company to issue an earnings warning. Mr. Lehman said the impact of the terrorist attacks won't be limited to only the first quarter. However, the financial chief said Sun's goal is to be profitable in its June quarter.

In late August, Sun said it was unlikely to meet its $3.7 billion revenue target for the first quarter, raising the likelihood that it would report a loss, largely because of weak demand for its computers in Europe and Japan.

Sun, which makes server computers that are popular for powering Web sites, had experienced extraordinary growth during the Internet's expansion phase. But the dot-com downturn, and problems among telecommunications companies that buy its computers, have hit Sun and other technology suppliers with a vengeance.

Edward Zander, Sun's president and chief operating officer said Friday that during the Sept. 11 week and the week following, orders were halted as companies tried to come to terms with the tragedy. Sun's first quarter, explained Mr. Zander, is heavily reliant on September orders, which didn't materialize. The executive did note that Sun's earnings miss wasn't due to losing market share.

Sun said Friday that its "position as a leading provider of Internet and network infrastructure is stronger than ever, but the current economic environment is obviously very difficult." The company said the computer industry continues "to consolidate and downsize itself."


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Ken Hansen
Group Leader, Validation
x1305, PA Office