A Partial Eclipse at Sun Microsystems

Sun Microsystems Inc. , citing a drastic slowdown in orders following the attack on the United States, is cutting about 4,000 jobs or 9 percent of its workforce and said it expects a wider loss for its first fiscal quarter ended Sept. 30.

The Palo Alto, Calif.-based company said that based on preliminary financial data, it expects quarterly revenue to be in the range of $2.7 billion to $2.9 billion for a fully diluted loss of 5 to 7 cents a share. Analysts on average had been expecting a loss of about 4 cents a share.

“Our business nearly ground to a halt in the two weeks after (Sept. 11),” Chief Financial Officer Mike Lehman said at a conference call. “Further, we believe the impact of these events will not be limited to our fiscal first quarter.”

The company offered no guidance for the second quarter, however. Execs said that the company expects to return to profitability no later than the June 2002 quarter.

Sun’s stock was sliding in early trading, down 43 cents to $8.86.

The company, a bellwether provider of hardware, software and services that power enterprise and network computing, also said it will “consolidate excess facilities” and expects to record a charge of approximately $500 million in the fiscal second quarter for the layoffs and facility closures.

“the current economic environment is obviously very difficult,” said Sun Chairman and CEO Scott McNealy. “The computer industry is continuing to consolidate and downsize itself. In addition, the events of Sept. 11 have impacted us all. Things were tough with the economy before, but now we are facing increasing uncertainties both in the U.S. and globally. To ensure the long term health of the business, we are making structural changes to the capacity of our company.”

Sun has avoided layoffs up until now. For the fiscal year ended June 30, 2001, Sun saw revenues rise 16 percent to $18.25 billion. However, net income before accounting changes fell 47 percent to $981 million and the company lost 3 cents a share last quarter.

Analysts, who have been worried that economic conditions may get even worse in the months ahead, have been steadily reducing their forecasts for Sun. Sixteen of the 22 analysts who track Sun reportedly reduced their profit targets for this fiscal year in the past month.

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