Sporkman
October 21st, 2008, 03:35 PM
http://biz.yahoo.com/ap/081020/sun_microsystems_outlook.html?.v=4
Sun Microsystems swings to big quarterly loss
Monday October 20, 6:28 pm ET
By Jordan Robertson, AP Technology Writer
Sun Microsystems swings to big quarterly loss, plans to write down value of business
SAN FRANCISCO (AP) -- Battered by competition and slowing demand, Sun Microsystems Inc. swung to a big loss in its fiscal first quarter, dragging the server and software maker's results below Wall Street's forecast.
Sun also plans to write down the value of its business, a sign of the company's deteriorating competitive position and vulnerability to the economic meltdown. Shares fell more than 8 percent in after-hours trading.
The Santa Clara, Calif.-based company is scheduled to release its earnings Oct. 30, but it offered an early peek Monday. Sun said its loss will be between 25 cents and 35 cents per share for the three months ended Sept. 28. Excluding one-time charges, the falls between 2 cents and 12 cents per share.
That's worse than the loss of 1 cent per share that analysts polled by Thomson Reuters were expecting. Sales were between $2.95 billion and $3.05 billion, lower than the average analyst prediction of $3.14 billion.
The results highlight the heavy challenges facing Sun, once a darling of the dot-com era, as it continues its nearly decade-long battle with deep financial problems and its high-cost business model.
Many analysts expected Sun to post dreary results for its quarter. But the worse-than-expected numbers renewed concerns about Sun's ability to survive if its troubles worsen.
"People were expecting it could be a really, really horrific first quarter," said Rick Hanna, equity analyst with Morningstar Inc. "While it may have been a little better than the disaster scenario, I'm concerned about the long term and where Sun's going ... I'm concerned about their viability long-term and their ability to remain independent."
Sun's strategy of developing free, "open-source" software and giving it away to spur sales of its high-end computer servers and support services hasn't paid off as investors would like. Sun had already warned Wall Street last quarter that it expected a sales decline and wouldn't turn a profit.
The company is losing market share in servers, and the financial crisis in the U.S. has hurt a big part of its business. However, many analysts say Sun's slipping competitive position in some markets has hurt the company worse than the dour economic climate.
The high end of the server market, where Sun has historically competed, is dominated by IBM Corp. and its mainframes. The low end, where Sun also now competes with machines featuring industry-standard chips from Intel Corp. and Advanced Micro Devices Inc., is under relentless pressure from price cuts and commoditized technology.
Sun is trying to play in both markets, and is getting squeezed on both ends.
Unlike IBM, which said last week it was able to shake off a slowdown in sales of cheaper servers by selling more of its top-tier mainframes, Sun doesn't have the scale to absorb big swings in its sales.
Sun didn't detail which of its businesses would have their values written down.
Sun said only that it will likely take an impairment charge on businesses that currently make up $1.8 billion of the $3.2 billion of Sun's total "goodwill," which refers to intangible assets like the company's reputation or perceived value in the marketplace.
Sun said it would likely take a charge because of the "current economic environment, Sun's operating results, and a sustained decline in Sun's market valuation."
Sun shares fell 48 cents, 8.3 percent, to $5.30 in after-hours trading after the company reported its results. The stock had gained 20 cents, 3.6 percent, to close at $5.78 during the regular trading session.
Sun Microsystems swings to big quarterly loss
Monday October 20, 6:28 pm ET
By Jordan Robertson, AP Technology Writer
Sun Microsystems swings to big quarterly loss, plans to write down value of business
SAN FRANCISCO (AP) -- Battered by competition and slowing demand, Sun Microsystems Inc. swung to a big loss in its fiscal first quarter, dragging the server and software maker's results below Wall Street's forecast.
Sun also plans to write down the value of its business, a sign of the company's deteriorating competitive position and vulnerability to the economic meltdown. Shares fell more than 8 percent in after-hours trading.
The Santa Clara, Calif.-based company is scheduled to release its earnings Oct. 30, but it offered an early peek Monday. Sun said its loss will be between 25 cents and 35 cents per share for the three months ended Sept. 28. Excluding one-time charges, the falls between 2 cents and 12 cents per share.
That's worse than the loss of 1 cent per share that analysts polled by Thomson Reuters were expecting. Sales were between $2.95 billion and $3.05 billion, lower than the average analyst prediction of $3.14 billion.
The results highlight the heavy challenges facing Sun, once a darling of the dot-com era, as it continues its nearly decade-long battle with deep financial problems and its high-cost business model.
Many analysts expected Sun to post dreary results for its quarter. But the worse-than-expected numbers renewed concerns about Sun's ability to survive if its troubles worsen.
"People were expecting it could be a really, really horrific first quarter," said Rick Hanna, equity analyst with Morningstar Inc. "While it may have been a little better than the disaster scenario, I'm concerned about the long term and where Sun's going ... I'm concerned about their viability long-term and their ability to remain independent."
Sun's strategy of developing free, "open-source" software and giving it away to spur sales of its high-end computer servers and support services hasn't paid off as investors would like. Sun had already warned Wall Street last quarter that it expected a sales decline and wouldn't turn a profit.
The company is losing market share in servers, and the financial crisis in the U.S. has hurt a big part of its business. However, many analysts say Sun's slipping competitive position in some markets has hurt the company worse than the dour economic climate.
The high end of the server market, where Sun has historically competed, is dominated by IBM Corp. and its mainframes. The low end, where Sun also now competes with machines featuring industry-standard chips from Intel Corp. and Advanced Micro Devices Inc., is under relentless pressure from price cuts and commoditized technology.
Sun is trying to play in both markets, and is getting squeezed on both ends.
Unlike IBM, which said last week it was able to shake off a slowdown in sales of cheaper servers by selling more of its top-tier mainframes, Sun doesn't have the scale to absorb big swings in its sales.
Sun didn't detail which of its businesses would have their values written down.
Sun said only that it will likely take an impairment charge on businesses that currently make up $1.8 billion of the $3.2 billion of Sun's total "goodwill," which refers to intangible assets like the company's reputation or perceived value in the marketplace.
Sun said it would likely take a charge because of the "current economic environment, Sun's operating results, and a sustained decline in Sun's market valuation."
Sun shares fell 48 cents, 8.3 percent, to $5.30 in after-hours trading after the company reported its results. The stock had gained 20 cents, 3.6 percent, to close at $5.78 during the regular trading session.