Sun Narrows Loss
Amid a 20% Gain
In Services Sales
By CHRISTOPHER LAWTON
October 27, 2006; Page B2
Sun Microsystems Inc. posted a narrower-than-expected loss and a 17% increase in revenue for its fiscal first quarter, as it benefited from recent acquisitions and increased sales to its services business.
The computer maker's performance could signal to investors that the company is moving closer to consistent growth and profitability. Sun, Santa Clara, Calif., hasn't had two consecutive quarters of profitable growth since its 2001 fiscal year.
Sun has struggled to expand amid stiff competition from competitors such as Hewlett-Packard Co. The company has moved in recent months to right itself by promoting its president, Jonathan Schwartz, to chief executive officer, and by laying off employees to cut costs. The company has also released new products to woo the market. Sun makes computer servers, the machines in data centers that handle chores such as running company databases and executing financial transactions.
For the quarter ended Oct. 1, Sun reported a net loss of $56 million, or two cents a share, compared with a net loss of $123 million, or four cents a share, a year earlier. Sun attributed the loss in part to $79 million in expenses related to asset amortization in recent acquisitions. The company acquired storage provider Storage Technology Corp. last year for $4.1 billion. Revenue rose to $3.19 billion from $2.73 billion a year earlier, falling shy of Wall Street's revenue estimate of $3.2 billion for the quarter.
Sun reported results after the end of regular trading. In 4 p.m. composite trading, its shares were up six cents to $5.36 on the Nasdaq Stock Market. In after-hours trading, its shares climbed to $5.39.
Market researcher IDC said Sun's total server revenue rose 15.5% to $1.58 billion in the second quarter. By comparison, total-industry server revenue rose 0.6% in the same period. So Sun gained market share in the quarter to 12.9%, compared with 10.8% in the first quarter.
Sun said product sales rose 15% to $1.96 billion. Services revenue was $1.23 billion, up 20%. Sun forecast its second-quarter revenue would be up in the high single digits.
Write to Christopher Lawton at christopher.lawton@wsj.com |
