Sun: Restructuring to blame for loss

Despite the loss, Sun made $3.8 billion for the fourth quarter, up from $2.9 billion for the same quarter last year

Sun Microsystems Inc. posted a loss of $301 million for the fourth quarter, blaming restructuring costs from a tumultuous period of layoffs and plant closings, the company announced Tuesday.

Sun, of Santa Clara, California, listed a loss of $0.09 per share, down from earnings of $0.01 per share and profit of $50 million in the same period a year ago. The result fell below a forecast of $0.03 loss per share for the quarter, which ended June 30, according to analysts polled by Thomson Financial.

Despite the loss, Sun had strong revenue, bringing in $3.8 billion for the fourth quarter, compared to $2.9 billion for the same quarter last year. The tally also beat analysts' forecast of $3.6 billion.

Most of Sun's increased revenue came from growing popularity of its Solaris 10 operating system, new products and acquisitions, the company said.

This marks Sun's first full quarter without co-founder and charismatic leader Scott McNealy, who stepped down as chief executive in April.

New Sun leader Jonathan Schwartz has spent many of his first 90 days cutting company spending.

He began layoffs in May that will affect 4,000 to 5,000 people over the next nine months. And he has sold Sun campuses in California, Puerto Rico and Toulouse, France. Schwartz plans to vacate a fourth property, in Louisville, Colorado, and put it up for sale within 12 months.

One-time charges from those actions dragged Sun to a loss for the quarter, but will make the company profitable in the long run, he told investors in a conference call.

Sun sold a lot of servers during the fourth quarter, pushing the portion of revenue generated by products to 66 percent, its highest level in eight quarters. The remaining 34 percent came from Sun's services division.

One reason for that increase was Sun's reorganization of its Sparc and x64-based server divisions into a single systems group, intended to make it more competitive with IBM Corp. and Hewlett-Packard Co.

"The fourth quarter's highlight was definitely our computer systems business," Schwartz said. The most successful products were low-end servers with one to eight processors, whether Sun's own "Niagara" UltraSparc T1 chips or Opteron chips from Advanced Micro Devices Inc. (AMD).

Sun also drew revenue from rising demand for its Java development platform, used in data centers and consumer devices from cell phones to Blu-ray disks. Sun also continued to see strong revenue from its 2005 acquisition of StorageTek, Schwartz said.

Join the discussion
Be the first to comment on this article. Our Commenting Policies