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Sun cushions slumping Q3 with layoffs

America (and possibly Reverend Wright) to blame

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A rather humbled Sun Microsystems blamed waning US technology spending for its third quarter loss.

Sun's third quarter revenue dipped half a per cent to $3.283bn, as the company struggled to close large deals in the US. The slow quarter pushed Sun back to red ink with the vendor posting a $34m loss, which compares to a $67m profit in the same period last year. Sun now plans to layoff between 1,500 and 2,500 workers to lower costs over the coming year.

Sun's product sales dipped to $2.0bn from $2.1bn, while services revenue increased to $1.26bn from $1.22bn last year.

The company's always upbeat executives were rather put off by conditions in the US.

"There appear to be a number of customers whose spending is uncertain," said Sun CFO Mike Lehman.

Sun, however, was chipper about the sales of its UltraSPARC T1 and T2-based servers, which doubled year-over-year.

In addition, the company remained bullish about its high-end server business with CEO Jonathan Schwartz saying that the big iron Unix is "improving as we speak". And, in fact, documentation around Sun's move to Fujitsu's four-core SPARC VII chip has started to pop up on Sun's website. Sun should shift onto that chip in the second half of this year.

Schwartz also said that Sun has signed up a new Solaris x86 OEM, which will join partners such as Intel, Dell and IBM. But he declined to reveal the name of the vendor. (Wuss - Ed.)

Investors let Sun know how they felt about the quarter during after-hours trading as they shredded JAVA shares by 15 per cent, at the time of this report. ®

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