Some interesting comments re SUNW
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Sun Stays the Course, but Says Things Aren't Easy
By Tish Williams
TSC Senior Writer
03/07/2002 05:57 PM EST
Various indicators show that the U.S. economy is picking up -- but from what investors heard from Sun and Intel about their midquarter performance, there's no reason to expect a miracle recovery. Thursday afternoon Sun Microsystems updated investors on the third quarter of its fiscal 2003, holding steady with its previous guidance.
At the same time however, the company cautioned that business is coming in slower this quarter than last. In the March quarter, Sun typically sees 50% of its business come in during the final month, and so far the company reports it has "a ways to go" to achieve its estimates.
Back in January, Sun executives chose to describe their outlook for the third quarter in loose terms, promising to push revenue up above the second-quarter's $3.1 billion level, which it believes it is on track to do if March shapes up. Wall Street consensus interpreted that to mean an increase to $3.2 billion in revenue, according to Multex.com, for a 22% year-over-year drop from the second quarter of 2001's $4.1 billion. Sun projected improvement in gross margins from the second quarter's 36.6%, which it stuck with Thursday.
Sun does not see a return to profitability until the fourth quarter, as it had previously stated. Analysts currently estimate the server maker will lose 2 cents a share in the quarter currently underway, compared to a profit of 8 cents a share a year ago in the third quarter of 2001.
Sun has seen demand for its computing machines muddied in the midst of widespread dot-com company failures and large-scale bankruptcies. Liquidation at those companies has put a formidable amount of technology on the "gray market" for resale, but Sun hopes the market for older used machines will diminish rapidly as users desire the features of the newer-generation UltraSparc III machines. Management touted the success of its UltraSparc III products as key to its third-quarter results. |
