Sun Microsystems (NASDAQ: JAVA) continues hanging in there despite debilitating delays in its acquisition by Oracle and continued softness in the IT market.
The company reported first-quarter fiscal 2010 results on Friday with no fanfare and no statement beyond the figures themselves. In its 10-Q filing with the Securities and Exchange Commission (SEC), Sun showed that the company is paring back on expenses as sales drop but it’s managing to hold on for now as it awaits European approval for its sale to Oracle (NASDAQ: ORCL).
Sun reported a first-quarter 2010 GAAP loss of $120 million, or $0.16 per share on sales of $2.24 billion. The GAAP net income is a big improvement from the loss of $1.68 billion, or $2.24 per share, reported in the same quarter last year. Gross margin improved to 43.4 percent, up from 40.2 percent a year ago.
Earnings excluding one-time charges, income would have totaled $15 million, up from the non-GAAP net loss of $62 million in the 2008 quarter. That puts Sun’s non-GAAP profit at $0.02, well above Wall Street estimates of a $0.09 per share loss, according to Thomson Financial.
However, Sun came up short against analysts’ estimates of $2.7 billion in revenue.
Sales hanging in the balance
The company is currently awaiting approval from the European Commission, which has hinted it may delay or not allow the deal to go through.
According to Sun, a large chunk of its revenue woes stem from the fact that customers are holding off on sales as they wait to learn the company’s fate.
Total revenue fell 25 percent year-over-year. Products and services were both about equal in terms of dollar figures but both were down quite a bit, with products sales down 32.7 percent and service revenues down 13.9 percent.
Revenue from servers dropped 31.4 percent from the same quarter in 2008 while storage products fell 35.9 percent and support services fell 13.9 percent. Revenue from new products declined 33 percent while unit sales of servers were down 41 percent.
Operating expenses declined 62.3 percent year-over-year as Sun cut staff and projects in advance of the firm’s purchase by Oracle. Sun has announced plans to reduce headcount by 3,000 or 10 percent of staff over the next 12 months. It’s expected to take a much bigger hit when Oracle closes the deal; as many as 10,000 may be furloughed.
Cash and short-term marketable securities totaled $2.55 billion, down from $3.06 billion in the previous quarter. Long-term debt was $589 million in the quarter, up $8 million from the previous quarter. Cash flow from operations declined to just $38 million in the quarter.