Sun Microsys CFO Sees Margin Improvement, Stock Buyback
02/06/2002
Dow Jones News Services
(Copyright c 2002 Dow Jones & Company, Inc.)
By Mark Boslet
Of DOW JONES NEWSWIRES
PALO ALTO, Calif. (Dow Jones)--Sun Microsystems Inc. (SUNW) can bring its gross margin back to a percentage in the mid 40s, Chief Financial Officer Michael Lehman said.
The company also should be able to achieve a double-digit operating margin, Lehman said.
"We have a plan," Lehman said at a company-sponsored meeting for analysts in San Francisco. "We're not panicked; we're not looking over our shoulder."
Instead, Sun is transforming itself into a leaner, more flexible company to adapt to a slower market and the economic downturn, he said. Gross margins will rise as some of the computer maker's new, top-end machines - such as its Star Cat Unix server - become more plentiful. Production should no longer be supply contrained this quarter, he said.
Sun's new Ultra Spark III chip, which is manufactured by Texas Instruments Inc. (TXN), also is benefitting from lower component costs, he said.
In the past 1 1/2 years, Sun's margins have slumped as its sales have fallen and prices come under pressure. "Pricing has been very difficult," and it is unlikely to improve quickly, Lehman said.
So Sun has begun to work internally to cut costs and improve operations.
The company is close to having completed a layoff of 9% of its staff, announced last October. It also has cut inventory and automated its supply chain with online technology.
The company has begun once again to generate cash and will again start buying back its stock, Lehman said.
-By Mark Boslet, Dow Jones Newswires, 650-496-1366; mark.boslet@dowjones.com
(END) DOW JONES NEWS 02-06-02
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