Sun Putting 2002 Behind It

Sun Microsystems Thursday tried to put a positive spin on what seems to be one of its worst years ever.

The Santa Clara, Calif.-based networking giant said it is taking more than $2 billion in charges, mostly due to investment losses. The company reported $2.915 billion in revenues compared with $3.108 billion for its second quarter last year, a decline of six percent. The company’s fiscal second quarter ended December 29, 2002.

Sun’s CFO Steve McGowan said despite the tough times, the company was “pleased” it grew revenue, reduced operating expenses, and achieved positive cash flow.

“Overall, our balance sheet is very strong with more than $5 billion in cash and marketable securities and net equity of over $7 billion,” McGowan added.

Sun’s net loss for the second quarter of fiscal 2003 was $2.283 billion or $.72 net loss per share. Analysts polled by Thompson/First Call were expecting Sun to post a second-quarter loss of 2 cents per share on sales of $2.9 billion.

Despite the gloomy news, CEO Scott McNealy put a positive spin on Sun Services, Sun StorEdge and UltraSPARC III processor-based servers, particularly its Sun FireTMV880, 4-way, and 8-way UNIX servers, and Sun Fire 12K and Sun Fire 15K servers, which the CEO said he thought performed well.

“We taped out next generations of our UltraSPARC family, rolled-out ground-breaking software offerings such as the Solaris 9 Operating Environment for x86 servers and the capacity on demand breakthrough software that allows network computing to be provisioned as needed,” McNealy said in a statement

Part of the net loss has also been attributed to acquiring Pirus and Terraspring to compliment its N1 server management strategy. Sun said it tried to counter the costs as best it could by announcing it would let 4400 people go.

Going forward, Sun said it was pleased with the court’s decision to include Java in Windows XP. U.S. District Judge J. Frederick Motz Thursday said Microsoft has 120 days to build Java into Windows. Motz decided on 120 days, after Sun lawyers asked for 90 days, while Microsoft’s legal team ask the judge for a three-phase approach over 180 days.

“It looks like users and developers are going to benefit the most from this,” McNealy said. “What we’ve done is create the ‘other’ developer base.”

Microsoft is expected to appeal the ruling, after the judge issues his formal order sometime next week.

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