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Sun Microsystems Shares Fall 17 Percent

Posted on: Wednesday, 23 July 2003, 06:00 CDT

Sun Microsystems Inc. shares fell 17 percent Wednesday after the hardware and software maker posted fiscal fourth-quarter earnings and revenues that fell short of Wall Street's expectations.

The company blamed continued weakness in corporate technology spending for the results.

For the three months ended June 30, Sun earned $12 million, or break-even on a per-share basis, compared with a profit of $61 million, or 2 cents per share, in the same period a year ago. Sales were $2.98 billion, down 13 percent from $3.42 billion a year ago, Sun said Tuesday.

Excluding special items, Sun earned a penny per share, compared with 2 cents per share last year. Analysts were expecting Sun to post a fourth-quarter profit of 2 cents per share on sales of $3.07 billion, according to a survey by Thomson First Call.

The results were released after the close of market. In Wednesday morning trading, Sun shares fell 82 cents to $3.90 on the Nasdaq Stock Exchange.

Sun said it generated $335 million from operating activities during the fourth quarter, and its balance of cash and marketable securities was more than $5.7 billion.

"We enter the new fiscal year with an intense focus toward growing revenue, improving profitability and maintaining positive cash flow from operations," said Scott McNealy, Sun's chief executive.

Sun's hardware and software systems helped power much of the growth of the Internet during the high-tech boom. The company was hit hard when many customers, including countless dot-coms, went out of business during the tech downturn that began in 2000.

Its proprietary equipment based on the Unix operating system now must compete with rival machines that run less-expensive chips and software.

In recent months, Sun has started selling such systems than use lower-priced chips built by Intel Corp. and run the Linux operating system as well as Sun's Solaris. It's also targeting new markets, such as retailers and government agencies.

McNealy said Sun "got a lot done" in the just-concluded fiscal year.

"Obviously we were dealing with a tough year," he said. "We didn't grow the business. That's something we're not happy with and we've got all our energy focused on both growing the company and being profitable for this fiscal year."

For the year, Sun lost $2.38 billion, or 75 cents per share, on sales of $11.43 billion. Last year, it lost $587 million, or 18 cents per share, on sales of $12.5 billion. The net loss for fiscal 2003 includes a noncash impairment expense of $2.13 billion.

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On the Net:

http://www.sun.com

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