week got even worse on Thursday when a top technology analyst had some unusually harsh words for the company.
Steve Milunovich of Merrill Lynch told Sun in an open letter that the company needs to cut 5,000-7,000 employees and accept its fate as a niche technology player or risk extinction.
Sun’s problems began after the market close on Monday, when it announced a $1.05 billion non-cash charge. That obscure accounting maneuver sent the message to financial markets that Sun is no longer sure it can generate taxable income.
But rather than being viewed as a sign of broader weakness in the technology sector, analysts view Sun’s problems as company-specific. Bernstein, a respected research firm, first came up with the calculation that Sun needs to cut another 5,000-7,000 jobs to get back to its revenue per employee rate of 1998-1999.
With $3 billion in cash and $1.5 billion in debt, Sun doesn’t face extinction anytime soon. But the accounting charge the company announced this week was its clearest admission yet that it needs to do something different. Wall Street certainly got that message loud and clear.
Sun reports earnings October 16.
The broader market rose despite weaker than expected factory orders, as investors found a silver lining in rising order backlogs. Dallas Fed President Robert McTeer said he expects employment to pick up, but at the cost of productivity, which sent bonds lower on the day. September employment numbers will be released Friday morning.
The Nasdaq rose 3 to 1836, the S&P 500 added 2 to 1020, and the Dow climbed 18 to 9487. Volume declined to 1.23 billion shares on the NYSE, and 1.61 billion on the Nasdaq. Advancers led 19-12 on the NYSE, and by 17-14 on the Nasdaq. Upside volume was 65% on the NYSE, and 53% on the Nasdaq. New highs-new lows were 245-5 on the NYSE, and 173-10 on the Nasdaq.
After the close, Siebel
rose on stronger than expected license revenue growth.
During the day, Oracle
slipped 2.5% on news that the government may have problems with its proposed PeopleSoft
rose 7.4% after boosting guidance, while Intuit
fell on warnings.
soared 18% on strong subscriber growth.
gained 4% on a video game deal with Microsoft
fell 2.5% on the company’s paid search plans.
rose after kissing and making up.
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