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Sun Microsystems has posted a second quarter net loss of $431 million as its sales fell by more than a third.

Losses for the quarter came in at $431 million compared with net income of $423 million in the same quarter last year. Excluding losses on Sun's equity investment portfolio, charges related to job losses and other charges, the firm lost $99 million.

Revenues were down 39 per cent to $3.11 billion from $5.12 billion recorded in Q2 2000 but up 9 percent on the $2.83 billion recorded in Q1. The firm blamed restructuring charges of $511 million and a slow down in technology spending for the losses.

Michael Lehman, Sun's chief financial officer, said: "compared with Sun's first fiscal quarter, bookings and revenue in the second fiscal quarter are up sequentially and inventory reductions are in excess of $200 million. We generated cash in the quarter on an operating basis, even with the payments we've made on our restructuring, and Sun's cash and liquid marketable investment position remains strong at approximately $6 billion."

"Despite economic uncertainties, Sun still is investing in product development and core competencies to promote the long-term growth of the company," he added.

The firm brushed aside concerns that heightened competition suppliers of lower-priced Wintel servers and Unix rivals would delay its recovery.

Sun CEO Scott McNealy said the start of volume shipments of its Sun FireTM 15000 server, flagship high-end system, and low-end Sun FireTM V880 server, during the quarter helped position the firm well for recovery

In a conference call, Sun executives said they expected the firm to return to profitability by the middle of this year. ®

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