RealTime IT News

Last Year's Cuts Hamper Sun Results

As expected, officials at Sun Microsystems, Inc. , didn't have good numbers to report to investors at their second quarter 2002 conference call Friday morning, announcing a net loss of $431 million and a slight climb in revenues.

Investors and analysts are well aware of Sun's problems, mainly because the network computing company gave Wall Street a foreshadowing of times to come with their first quarter 2002 report, which blamed the Sept. 11 events and a shaky environment for computer purchases.

Investors were well aware the second would likely be worse than the first, with an expected half-billion charge from last October's restructuring moves getting added to the financial sheets.

Michael Lehman, Sun executive vice president of corporate resources and chief financial officer, said, all things considered, this second quarter is much better than the first.

"Compared with Sun's first fiscal quarter, bookings and revenue in the second fiscal quarter are up sequentially and inventory reductions are in excess of $200 million," he said. "We generated cash in the quarter on an operating basis, even with the payments we've made on our restructuring, and Sun's cash and liquid marketable investment position remains strong at approximately $6 billion."

Sun's problems extend back well before September of last year, with an inevitable downturn in the market after years of high-tech success exacerbating current events. As a result, Sun executives were forced to restructure and retool their business, cutting 4,000 jobs in October 2001.

Even as they revised their first quarter 2002 projections, Sun officials told analysts they would charge the one-time $500 million restructuring fee in the second quarter and look for June 2002 as their due date for a "return to profitability."

Revenues of $5.9 billion for the first six months of fiscal 2002 point to decreased spending, a 41 percent drop from 2001. Still, despite the overall loss, $3.1 billion of that revenue came in the second quarter, showing a slight nine percent increase over the first quarter of 2001.

"We are showing signs of progress. Despite economic uncertainties, Sun still is investing in product development and core competencies to promote the long-term growth of the company," Lehman said.