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Sun's Q4 outlook: cloudy and fading

It's a good thing Sun got a $7.4 billion commitment from Oracle in writing a few months ago, because if it had to negotiate off of this quarter's earnings, Oracle would be paying a lot less.

The last of the Unix giants pre-announced fiscal fourth quarter results ended June 30 and they are not pretty. Sun said it expects revenues for the fourth quarter of fiscal 2009 to be in the range of $2.580 to $2.680 billion, as compared with $3.780 billion for the fourth quarter of fiscal 2008. That's almost a 40 percent drop year-over-year. Ouch. Wall Street had been expecting revenue of around $3.03 billion.

Sun anticipates a GAAP net loss per share for the quarter in the range of $(0.24) to $(0.34). On a non-GAAP basis, which is what everyone uses on Wall Street, Sun expects net loss per share in the range of $(0.06) to $(0.16).

Non-GAAP net loss per share excludes amortization of acquisition-related intangibles, stock-based compensation, restructuring and related impairment of long-lived assets, settlement income, net gain or loss on equity investments and the tax effect of these non-GAAP adjustments.

Sun hasn't said why the quarter was so bad, but it shouldn't be hard to figure out. The economy, Sun's expensive hardware and a loss of confidence in the firm all have to have weighed on sales. No doubt its sales reps are pre-occupied, too, either worrying about their job, trying to find a new one before the axe falls, or likely both.

Oracle still says it has Sun's back, at least publicly. It issued a statement saying it still expects the Sun acquisition to be accretive by at least 15 cents a share on a non-GAAP basis in the first full year after the purchase is complete, and that the acquired business will contribute over $1.5 billion to Oracle's non-GAAP operating profit in that year and $2 billion in the second year.

Sun shareholders will vote to approve the merger on Thursday, July 16.

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