NEW YORK (CNN/Money) - Sun Microsystems, the maker of servers that run corporate computer systems, said Tuesday that current-quarter revenue will meet Wall Street forecasts but gross margins will fall amid rising expenses.

In a mid-quarter update, Sun, whose shares have fallen nearly 70 percent this year, said that revenue in the quarter ending next month will meet the $2.9 billion average forecast of analysts surveyed by First Call.

But Stephen McGowan, Sun's chief financial officer, said margins will slip "slightly" from the previous quarter as expenses rise because of increased spending on research and development.

Sun, which did not give a bottom-line forecast, was expected to lose 1 cent per share in its fiscal second quarter, according to First Call, after losing 3 cents per share in the year-ago period.

In a conference that was interrupted for about a minute because of a "technical difficulty," Sun said it was too early in the quarter to give many business details.

Eight weeks into a thirteen-week period ending Dec. 29, McGowan said Sun's margins should fall about 1 percentage point from the previous quarter's.

"That's the best guidance I can give," McGowan said, responding to an analyst's question.

The news, released after the closing bell, had little apparent effect on Sun shares. They rose 5 cents to $3.81 on Instinet.

A pullback in business spending on new technology has taken a toll on Sun, which makes workstations and servers. Some of the Internet and telecommunications companies that were important Sun customers in the 1990s no longer exist.

Shares of Sun (SUNW: Research, Estimates), based in Santa Clara, Calif., are down 69 percent this year, underperforming the Nasdaq composite index, which is off 26 percent in 2002.

The company has been saving money by cutting jobs. Analysts believe Sun's current-quarter losses will narrow from 3 cents a share a year ago even as current-quarter sales are expected to fall about 6 percent.

The company has largely completed its job reductions, of 4,400 company-wide announced last month, in the United States, McGowan said. The majority of the job cuts outside of the United States will by completed by the end of the third quarter, he said.  

-- Reuters contributed to this report.