WSJ: Sun Micro Warns of Wider Loss
OCTOBER 20, 2008, 4:48 P.M. ET
Sun Microsystems Inc. warned of a much larger-than-expected quarterly loss on lower revenue, as the computer maker begins to suffer from the economy's meltdown.
Sun, which has spent billion on acquisitions such as StorageTek and MySQL, also said it will likely take a goodwill impairment charge.
Sun expects its fiscal first-quarter loss to be 25 cents to 35 cents a share, which includes a $60 million restructuring charge but excludes the potential goodwill impairment.
Sun, which will report full results Oct. 30, put revenue at $2.95 billion to $3.05 billion, while analysts are looking for $3.14 billion. Gross margin is expected to be 39% to 41%.
The company is reviewing the goodwill on its books, reflecting weakness in its operating results and market capitalization and the economy overall. As of Sept. 28, the company had $3.2 billion in total goodwill, of which $1.8 billion is tied to units that may be impaired.
Sun makes computer servers, the machines in data centers that handle chores such as running company databases and executing financial transactions. It has also been increasing its software presence, highlighted by its acquisition earlier this year of open-source software company MySQL. Sun has continued expanding its chip-making business, buying much-discussed semiconductor start-up Montalvo Systems earlier this year.
Write to Jennifer Hoyt at jennifer.hoyt@dowjones.com
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