Sun Micro shares up on preliminary earnings
Tuesday July 15, 8:43 pm ET
By Sue Zeidler
LOS ANGELES (Reuters) - High-end computer maker Sun Microsystems Inc (NasdaqGS:JAVA - News)on Tuesday posted lower preliminary fourth quarter results that were largely in line with Wall Street forecasts, but sparked a rally in its stock by investors who had feared worse results.
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Amid general fears for the economy Sun shares had been down 25 percent in the last month and they rose nearly 13 percent after hours on Tuesday.
"Investors were expecting worse," Cowen and Co analyst Louis Miscioscia wrote in a research note.
Sun, the world's fourth largest business computer maker, said it expects fourth quarter net income of 5 cents to 15 cents per share, including a $100 million restructuring charge.
This compares with Wall Street's average forecast of 10 cents a share, including charges, according to Reuters Estimates, and a year-earlier quarterly profit of 36 cents a share, adjusted for a reverse stock split.
Sun on Tuesday also said it expects to post fourth quarter revenues ranging from $3.73 billion to $3.8 billion, as compared with $3.835 billion for the fourth quarter of fiscal 2007. Wall Street has been targeting $3.798 billion, according to Reuters Estimates.
Excluding items, Sun expects to report earnings per diluted share ranging from 25 cents to 35 cents.
"The stock has been under heavy pressure. Everyone expected Sun to preannounce a shortfall and now the bad news is out of the way," said Brent Bracelin, analyst with Pacific Crest Securities.
In May, Sun Microsystems said it would take a fourth quarter restructuring charge to account for cuts of 1,500 to 2,500 jobs in the face of U.S. economic weakness and delays in orders from some customers.
"In these difficult economic times, we continue to see customers across the world look to open software and hardware as a source of savings, and feel Sun is well positioned with our most robust line ever of server, storage, software and service offerings," said Jonathan Schwartz, Chief Executive Officer of Sun Microsystems.
Sun Microsystems' shares rose from a Nasdaq close of $8.80 a share to $9.90 a share after the company issued the release.
(Reporting by Sue Zeidler; editing by Carol Bishopric)
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