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Europe catching US economy's cold, says Sun

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Sun reported lower than expected demand for Sun's new UltraSPARC III systems in its mid-quarter update yesterday, pushing revenue estimates slightly down into the $3.8 billion to $4.0 billion range for the quarter. It's the third time Sun has issued downwards revisions to its estimates.

CFO Mike Lehman said the US market has stabilised, but the company is experiencing lower than expected demand in Europe. Weaker demand for internet infrastructure companies was knocking into other areas, specifically Sun's financial customers, he said.

Some component supply concerns remain; although CFO Mike Lehman ackowledged: "we don't have all the chips we'd like," this should be resolved by the end of the quarter. Lehman was confident that an UltraSPARC III box will ship within six months. The inventory backlog may be slightly up, but is not dramatically different.

Analysts were looking for Sun to clear out supplies of older UltraSPARC II based machines.

Lehman wouldn't elaborate on questions about competition from Fujitsu Siemens, which sells Sparc-compatible kit in Europe. The latter claims to have sold over 4,000 Solaris boxes. ®

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