Sun posts US$174 million loss in Q1
- 15 October, 2004 08:25
With US$190 million in charges on its balance sheet related to restructuring and its recent patent lawsuit settlement with Eastman Kodak, Sun Microsystems on Thursday posted a net loss of US$174 million for its the first quarter of its fiscal 2005 year, which ended September 26.
In the same period last year, Sun reported a loss of US$286 million or US$0.09 per share. The most recent quarter's loss amounted to US$0.05 per share, more than the US$0.03 per share financial analysts had been expecting, according to a survey of 23 analysts by Thomson First Call.
Excluding the restructuring and Kodak settlement charges as well as a US$4 million investment loss, Sun's net income for the quarter would have been US$13 million on a non-GAAP (generally accepted accounting principles) basis, making for the company's second profitable quarter in a row after a string of losses.
"We've had two in a row, back to back," said Sun's Chief Financial Officer Stephen McGowan, in a conference call Thursday.
Sun reported income of US$795 million last quarter, a number that was buoyed by the nearly US$2 billion it received as part of its legal settlement with Microsoft. Discounting the Microsoft money, Sun reported a net loss of US$169 million during that quarter.
Total first-quarter revenues for the computer-maker were US$2.63 billion, up 3.6 percent from their year-ago total of 2.54 billion, [b] but lower than the US$2.712 billion [b] analysts had been expecting, according to Thomson First Call.
Revenues from sales in the U.S. and Japan were down 5 percent and 1 percent, respectively, from last year's totals. However, Sun reported an increase of 18 percent from last year's European revenues, which were helped by sales like the recent 5,000 license Java Desktop System deployment with the U.K.'s National Health Service.
Sales to Hewlett-Packard customers looking to move from hardware built by the former Digital Equipment (DEC) also contributed to Sun's performance in Europe, said Chairman and Chief Executive Officer Scott McNealy. "There's clearly a lot of DEC installed base that we're taking advantage of there."
Over the past year, Sun has gradually expanded an "HP Away" program designed at enticing users of HP's legacy platforms, including the Alpha systems once sold by DEC. Sun sees HP's transition to systems based on Intel's Itanium microprocessor as a potential opportunity. "We're definitely seeing a weakening in HP's installed base as they realize that they've got a roadmap transition to fund, because they've got to get off a dead microprocessor," said Jonathan Schwartz, Sun's president and chief operating officer.
Sun has now handed layoff notices to 3,500 employees since it announced job cuts in April of this year, 200 more positions than it had originally expected to reduce. At present, 2,900 of those employees have left the company, and the remaining 600 employees were notified of their layoffs during the most recent quarter, McGowan said.
Shares of Sun's stock (SUNW) ended the regular trading day on the Nasdaq stock exchange down 1.2 percent at US$3.97. In after-market trading on INET, the stock was up to US$4.09 Thursday evening.