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Sun's losses deepen
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October 18, 2001: 5:18 p.m. ET
Server maker continues to struggle amid weak demand and stronger competition.
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NEW YORK (CNNmoney) - Sun Microsystems reported a fiscal first-quarter loss that was within its recently reduced targeted range on revenue that plunged more than 42 percent from the same quarter last year.
After the closing bell, Sun, the top supplier of Unix servers, which power websites and many corporate networks, said it lost $158 million, or 5 cents per share during the quarter ended Sept. 30. That excludes one-time charges and compares with an operating profit of 15 cents per share during the same quarter last year.
Including one-time items, Sun's (SUNW: Research, Estimates) net loss for the quarter was $180 million, or 6 cents per share, compared with a net profit of $456 million, or 16 cents per share a year ago.
At $2.8 billion, Sun's first-quarter revenue fell more than 42 percent from the $5 billion in sales the company logged during the same quarter last year.
On Oct. 5, Sun pre-announced the quarter, saying it expected to log a loss, excluding one-time items, ranging between 5 cents and 7 cents per share on roughly $2.9 billion in sales. Prior to that announcement, Wall Street's expectations had been for a loss of 4 cents per share on about $3.3 billion in sales.
The company blamed the miss in large part on "a near halt in sales" for two weeks following the Sept. 11 terrorist attacks on the United States.
At that time, Sun also warned that it will not return to profitability until its fourth quarter, which ends in June.
Sun did not provide any financial forecasts in its earnings release Thursday and said executives do not plan to host the traditional quarterly teleconference with analysts.
The company said the remarks made during the Oct. 5 call continue to represent Sun's expectations for fiscal 2002. At that time, the company said it could not give any more specific guidance on revenue or profits going forward because of the uncertainty in technology purchase plans of its customers.
As have most companies in the data-networking sector, Sun's business has been hurt by a slowdown in capital spending, especially among telecommunications and Internet service providers in the United States who, faced with a slowing and uncertain economy, have either deferred or cancelled many of their new equipment orders.
Sun also has been facing increased competition in the server market, with IBM substantially stepping up its efforts with aggressively priced systems.
Competition between the two companies has intensified over the past year and was highlighted in recent weeks as each introduced its latest most powerful server product to date.
But the current market environment has weighed more heavily on Sun's bottom line, while IBM, which also is the world's largest provider of information technology services, has been insulated by its broader array of products and services and an "annuity-like" business model, which Big Blue executives expect will shield the company in the months ahead.
For its part, Sun has taken a number of cost-cutting measures, including shedding staff and streamlining operations.
Moving forward, Sun said it will continue to "resize" some areas of the company where it has excess capacity, including facilities, while protecting its field sales and service coverage, ensuring customer satisfaction, and protecting research and development. 
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