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Sun warns on Q1 (and it ain't getting better)

Worse even

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Sun Microsystems warned yesterday that sales for its first quarter will fall short of expectations. The company was gloomy about the prospect of customers opening their purses.

In a conference call with analysts, Sun's Chief Financial Officer Steve McGowan said its Q1 2003 revenues are likely to tap out at around the same level as Q1 2002, when sales hit $2.86 bn. That's at the bottom end of Sun's forecast from July that its Q1 2003 revenues would be 10 per cent to 15 per cent down from the $3.4 billion it recorded in Q4 2002.

"We've not seen any improvement in the current IT spending environment. In fact, some would say it might actually be worsening," McGowan told analysts, Reuters reports.

In bad news for its customers, Sun intends to protect its margins during this difficult period by restricting its discounts scheme.

The outlook for staffers is also less than rosy with the likelihood that Sun will make further job cuts.

Sun held out longer than most IT firms in making redundancies until last October when it announced the loss of 3,900 jobs or nine per cent of its workforce. The redundancies were the first in Sun's 20-year history. ®

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