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Sun says orders on track
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December 6, 2001: 6:00 p.m. ET
Without giving specifics, company says business is as expected.
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NEW YORK (CNN/Money) - Executives of Sun Microsystems said Thursday the company's business was tracking within their expectations, but at the same time declined to provide any specific financial forecasts.
"We just don't think it's appropriate right now, in these times, to give a range," Michael Lehman, Sun's chief financial officer, told analysts during a teleconference.
"It's just not a normal environment out there," Lehman added.
Thursday's teleconference was the first time Sun executives provided a formal business update to Wall Street analysts since they reported the company's fiscal first-quarter results on Oct. 18. But at that time, they also declined to provide specific financial forecasts and did not take questions, saying in a statement only that they expected a sequential increase in revenue.
In the first quarter, Sun (SUNW: Research, Estimates), a top supplier of Unix servers -- the large computer systems used to power websites and corporate networks -- lost $158 million, or 5 cents per share, excluding one-time items. First-quarter revenue was $2.8 billion.
Wall Street generally is expecting Sun to log a fiscal second-quarter operating loss of 4 cents per share on roughly $3.1 billion in revenue, according to a survey conducted by earnings tracker First Call.
That would compare with a profit of 16 cents per share, and reflect a 39 percent decline in revenue from $5.1 billion during the same quarter last year.
Analysts at First Call said Thursday that the estimate for a loss of 4 cents per share has not changed since Oct. 8.
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 (IBM: Research, Estimates) substantially stepping up its efforts with aggressively priced systems.
Lehman said Sun's orders in November were "linear," which refers to the smoothness and predictability of incoming orders. He noted that the linearity of November's orders was stronger than October.
"We were more linear than we have been in quite a while," Lehman said.
Earlier this week, John Chambers, the top executive of networking-equipment maker Cisco Systems, made similar comments about ordering patterns in November, prompting a strong rally in its shares.
But Sun's stock fell following Lehman's comments, which he made after Thursday's close. After falling 42 cents to $14.15 on Nasdaq ahead of the teleconference, Sun's shares dipped to $14.09 in extended-hours trade.
Sun executives would not comment at all about any quarters beyond the current one, which ends this month. However, they did reiterate the company's prior statement that it expects to return to profitability during the June quarter.
In response to the company's declining revenue, Sun has taken a number of cost-cutting measures, including cutting roughly 4,000 jobs from its global workforce and streamlining operations by shuttering some facilities.
By the end of the quarter, Lehman said roughly 3,000 of those job cuts will have been completed. He said Sun will record a total restructuring charge of about $500 million in the quarter as well. 
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