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Thursday, 28 July 2005 10:32

Sun earnings beat forecasts, but sales continue to slip

By Stan Beer
Sun Microsystems has reported earnings that outpaced Wall Street expectations for the quarter. But the company's revenue continued to fall, indicating that the computer maker has yet to achieve a turnaround, reports The New York Times (27 July).
One of the highest fliers of the dot-com boom, Sun's revenue has collapsed in the last five years and it has been hunting for a path to growth while waiting for a rebound in demand among its biggest corporate customers, reports the newspaper. Sun said that revenues were US$2.98 billion in its fiscal fourth quarter, a decrease of 4.3 percent from US$3.11 billion a year ago. Net income was US$121 million, or 4 cents a share, compared with US$783 million, or 23 cents a share, a year earlier. The 2004 quarter included US$1.6 billion in revenue from a legal settlement with Microsoft. The NYT reports that the company generally avoided offering a forecast for the coming year, though Stephen McGowan, Sun's chief financial officer, said certain aspects would be challenging. He said the company planned to reduce its work force by 1,000, or about 3 percent, over the next year. Several analysts said that Sun appeared to have made some progress toward ending its financial slide. The NYT reported on the success the company had had in selling its new low-end computer server line, based on Advanced Micro Devices x86 microprocessors. The company said it had sold more than 50,000 of the low-end systems in the quarter, an increase of 170 percent from a year earlier. Over all, the company sold 331,000 server processors, a growth rate of only 7 percent. The newspaper also reported that the company said it would announce a significant agreement with General Motors. The carmaker is planning to make Solaris and Java, Sun's software operating system and programming environment, the standards for its server computers.

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