Sun blames quarterly loss on restructuring fees
- 26 July, 2006 08:00
Sun Microsystems has posted a loss of $US301 million for the fourth quarter, blaming restructuring costs from a tumultuous period of layoffs and plant closings.
The vendor listed a loss of $US0.09 per share, down from earnings of $US0.01 per share and profit of $US50 million in the same period a year ago. The result fell below a forecast of $US0.03 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 $US3.8 billion for the fourth quarter, compared to $US2.9 billion for the same quarter last year. The tally also beat analysts' forecast of $US3.6 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 4000-5000 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 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.
Sun sold a lot of servers during the fourth quarter, pushing the portion of revenue generated by products to 66 per cent, its highest level in eight quarters. The remaining 34 per cent came from Sun's services division.
One reason for that increase was Sun's reorganisation of its Sparc and x64-based server divisions into a single systems group, intended to make it more competitive with IBM and HP.
"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 (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.
It also continued to see strong revenue from its 2005 acquisition of StorageTek, Schwartz said.