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Some analysts followed the brief conference call by paring back their expectations for Sun.
UBS Warburg lowered its fourth-quarter revenue outlook to $3.2 billion, reflecting 3 percent quarter-on-quarter growth, down from an earlier estimate for $3.4 billion. The broker also said it sees break-even results in the fourth-quarter vs. its previous profit estimate of 1 cent a share.
At Merrill Lynch, analyst Steve Milunovich noted that Sun has announced a slower pace of bookings for the second quarter in a row. "We believe the enterprise spending environment has changed little," he said. "Sun is seeing some strength in government and health care, but competition (mostly with IBM) remains acute." Milunovich maintained his profit target of 1 cent a share, but slightly lowered revenue expectations to $3.3 billion from $3.37 billion.
Deutsche Bank analyst George Elling, though, noted that half of Sun's fourth quarter sales are typically booked in the month of June. "We were pleased to see Sun maintain its guidance, particularly in light of the difficult economy and competitive environment. We continue to believe that the company has the right market strategy and product line to take advantage of the economic turnaround when it occurs."
Sun's direction
On April 18, Sun told investors to expect a fourth-quarter profit on "slightly higher" sequential revenue. Also, Sun targeted modestly higher gross margins.
During its third quarter, Sun posted a loss of $37 million, or 1 cent a share, on revenue of $3.1 billion. Gross margin was 42 percent.
During its fourth quarter last year, Sun's net loss was $88 million, or 3 cents a share, on revenue of $4 billion. Gross margin was 41.5 percent.
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