Sun’s Revenues Drop 43%

Despite reduced expectations from the Street and itself, Palo Alto, Calif.’s Sun Microsystems Inc. said Thursday
that its Q1 revenues plunged 43 percent from the year-ago period, and posted a loss of $158 million, or 5 cents per share. First
Call analysts polled had said the top U.S. Unix server seller in the country would lose 6 cents per share.


Still, like many tech firms, Sun sold far fewer of its flagship products as the firm listed its revenues at $2.86 billion, down from
the $5.05 billion in the year-ago period.


Sun had revised its earnings estimate following the Sept. 11 attacks, forecasting a loss of 5 to 7 cents a share for its fiscal
first quarter ended Sept. 30, on revenue of $2.7 billion to $2.9 billion.


Citing a difficult economic climate, Sun Chairman and CEO Scott McNealy said in a public statement that while the PC industry
downsizes, his firm will continue to focus on its popular server products, such as the UltraSPARC III-based line, which ranges from
low-end sub-$1,000 systems to larger, complex $10 million systems such as its recently launched SUN Fire 15K.


The charismatic leader also expressed confidence in Sun’s Java-based services and the Liberty Alliance Project which, as an answer
to Microsoft Corp.’s .NET Passport service for protecting users’ identities, aims to offer an open, federated option.


In a parting shot in which he assured the public that Sun holds about $6 billion in cash, McNealy also let on that Sun will be
“resizing some areas of the company where we have over-capacity, including facilities” but did not go into specifics. That tidbit
comes on the heels of a 9 percent workforce slashing on
October 5
— the same day the company revised its earnings estimate.


IBM Corp., Sun’s chief rival in terms of high-end servers, said Tuesday that its net income dropped 19 percent to $1.6 billion, or 90 cents
per share.


Sun will hold no conference call to brief audiences about Q1 results.

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