Sun takes a Haircut as earnings slump

Red ink shock

Sun Microsystems income crashed in the last three months for the second successive quarter, putting it in the red for the period, the company reported yesterday. Although such has been its phenomenal growth in recent years the $3.09 billion Sun earned puts it back to where it was in early 2000.

"We've taken a haircut on earnings," admitted CEO Scott McNealy. Sun's loss for the quarter was $88 million before adjustments. Product margins have taken a trip to the barbers, too: 42.6 per cent compared to 54.9 per a year ago. The company has increased R&D spend, up 17 per cent on a year ago, as it prepares to move its entire server line to UltraSPARC III. There's been some retooling of midrange servers, and work continues on UltraSPARC IV and V and MAJC processors.

You can read more about some of Sun's forthcoming hardware, which it hasn't announced yet, here.

For the fiscal year which ended with this quarter, Sun made a pro forma profit of $1.45 on earnings of $15 billion. The company has a $6 billion war chest of cash and investments.®

Sponsored: 10 ways wire data helps conquer IT complexity