Sun Microsystems is slashing Q3 sales forecasts - and it's all the US economy's fault. The company projects sales growth at 10-13 per cent, compared with previous forecasts of 30 per cent, and profits of 7-9 cents a share, against the previous analyst consensus of 15 cents for the quarter.

In a conference call, COO Ed Zander blamed a "broad-based downturn in capital spending" for the profits warning.

"We are disappointed with one and only one thing, and that is the US economy," he said.

Last week, Sun introduced a recruitment freeze, but what is to do with all that kit it built in expectation of sales that never came through. Sun may have inventory issues to work through for some time yet. ®

Related story

Sun freezes jobs, steps up cost cuts