Feeds

Second quarter loss for Sun

Underestimates own popularity

HP ProLiant Gen8: Integrated lifecycle automation

Poor planning combined with acquisition and restructuring costs have pushed Sun Microsystems into its second loss for the fiscal year.

Sun reported a $223m net loss, down from a $4m profit, on revenue that grew 17 per cent to $3.337bn for the three months to December 25, 2005. Sun recorded a loss of $0.07 per share compared to break-even last year. The figures build on Sun's first quarter's losses, which came in at $123m.

Sun's chief executive told Wall Street on Tuesday that lead times for servers running the UltraSPARC IV+ machines had been "longer than we expected" and had equated to a product back log worth $100m during the second quarter of Sun's fiscal 2006.

"Our new year resolution is not to underestimate demand of new products," McNealy joked. "We hope to get caught back up by the end of the next quarter."

Unfortunately for McNealy, that much needed server revenue occurred as Sun simultaneously absorbed $145m of purchasing price accounting adjustments and $10m in restructuring charges associated with last year's acquisitions of both SeeBeyond Technologies and StorageTek.

Frustrated by Sun's poor sales and capacity planning, Wall Street analysts grilled McNealy over whether the company expects the UltraSPARC IV+ backlog will translate into a third-quarter sales fillip. He initially demurred, saying Sun was "not in a position to speculate" about the ability to translate demand into sales, but finally promised a straight translation of order to sales with "1:1 book to build."

In a further unsettling twist for analysts, the impact of SeeBeyond and StorageTek will continue to be felt on quarterly results into the near future. Sun expects to write down $75m per quarter for the next three and a half years.

It remains unclear, meanwhile, how much SeeBeyond or StorageTek will help Sun's boost its revenue. The company Tuesday reported $368m in product revenue from StorageTek during the quarter, but did not break out income from SeeBeyond as it was "not material to the quarter's numbers".

McNealy said Sun expects to monetize its open source and "free" software strategy during the coming quarter through support contracts.

Elsewhere in the second quarter, revenue from the sale of Sun's servers, workstations, data storage and other hardware increased 14.5 per cent to $2.11bn, while services revenue rose 22.7 per cent to $1.23bn. ®

Reducing security risks from open source software

More from The Register

next story
Sysadmin Day 2014: Quick, there's still time to get the beers in
He walked over the broken glass, killed the thugs... and er... reconnected the cables*
SHOCK and AWS: The fall of Amazon's deflationary cloud
Just as Jeff Bezos did to books and CDs, Amazon's rivals are now doing to it
Amazon Reveals One Weird Trick: A Loss On Almost $20bn In Sales
Investors really hate it: Share price plunge as growth SLOWS in key AWS division
US judge: YES, cops or feds so can slurp an ENTIRE Gmail account
Crooks don't have folders labelled 'drug records', opines NY beak
Auntie remains MYSTIFIED by that weekend BBC iPlayer and website outage
Still doing 'forensics' on the caching layer – Beeb digi wonk
BlackBerry: Toss the server, mate... BES is in the CLOUD now
BlackBerry Enterprise Services takes aim at SMEs - but there's a catch
The triumph of VVOL: Everyone's jumping into bed with VMware
'Bandwagon'? Yes, we're on it and so what, say big dogs
Carbon tax repeal won't see data centre operators cut prices
Rackspace says electricity isn't a major cost, Equinix promises 'no levy'
prev story

Whitepapers

Designing a Defense for Mobile Applications
Learn about the various considerations for defending mobile applications - from the application architecture itself to the myriad testing technologies.
Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Top 8 considerations to enable and simplify mobility
In this whitepaper learn how to successfully add mobile capabilities simply and cost effectively.
Seven Steps to Software Security
Seven practical steps you can begin to take today to secure your applications and prevent the damages a successful cyber-attack can cause.
Boost IT visibility and business value
How building a great service catalog relieves pressure points and demonstrates the value of IT service management.