Sun eclipsed by worst ever quarter

Sun Burn

Sun Microsystems reported its worst ever quarterlies yesterday. Q2 2003 revenues were down six per cent to $2.915bn from $3.108bn in the same period the year before (Q2 2002). This resulted in a net loss of $2.283bn for Q2 2003, with margins also down 6.7 percentage points to 43.3 per cent.

Sun wrote off $2.125 billion for the "impairment of goodwill and other intangible assets" and also took a $357 million hit for a previously-announced restructure.

If there's a bright spot in the figures it's that Sun's Q2 2003 revenues increased sequentiall $168 million or six per cent from Q1 2003. But charges have dragged Sun's results further into the red: a Q1 loss of $111mn has mushroomed into a $2.172bn loss this quarter, its worst ever quarterly bottom line.

Sun tried to put a brave face on the figures, which will almost inevitably result in further restructuring (read job cuts).

Steve McGowan, Sun's Chief Financial Officer, said: "Despite the difficult economic environment, we are pleased that, on a sequential basis, we grew revenue, improved our gross margin percentage and reduced operating expenses, and achieved positive cash flow from operations."

Excluding one-off charges, Sun recorded pro-forma revenues of $10 million

Sun Chairman, CEO and President Scott McNealy said the company "put in a solid performance this quarter" and pointed to segments of the market where Sun, in his opinion, shone. "SunServices, Sun StorEdge [storage] and UltraSPARC III processor-based servers, particularly our Sun Fire V880, 4-way, and 8-way UNIXservers, and Sun Fire 12K and Sun Fire 15K servers performed well.

"We taped out next generations of our UltraSPARC family, rolled-out ground-breaking software offerings such as the Solaris 9 Operating Environment for x86 servers and the capacity on demand breakthrough software that allows network computing to be provisioned as needed." ®

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