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Technology Stocks : All About Sun Microsystems -- Ignore unavailable to you. Want to Upgrade?

To: Charles Tutt who wrote (47596)	3/4/2002 9:26:45 PM
From: Brian Sullivan	Read Replies (1) \| Respond to of 64865

Analysts expect bad news from Sun news.com.com Network computer maker Sun Microsystems may disappoint investors at a mid-quarter update later this week, analysts said Monday. Sun has been on a money-losing jag for the past three quarters, as the dot-com companies that turned to it for equipment to build the Internet went under. But Sun sowed hope in January with forecasts that its loss would narrow and revenue would rise this quarter from the previous one. Sanford C. Bernstein and Merrill Lynch brokerages said after checks with Sun resellers that they believed the company might have to admit in a Thursday conference call that demand, especially in the United States, was weak since corporations had not resumed spending frozen technology budgets. They also reported that Sun employees and resellers were bracing for a new round of layoffs on top of last year's 9 percent cut in the work force, which cost nearly 4,000 jobs. A Sun representative declined to comment on rumors. Sun's shares, which have risen 6.6 percent in a general technology rally since the beginning of October, compared with a 14 percent rise by IBM, lost 26 cents, or 3 percent, on Monday, closing at $8.67 on the Nasdaq. Bernstein analyst Toni Sacconaghi cut his revenue estimate on Monday for Sun's fiscal third quarter, ending this month, to $3.1 billion from $3.3 billion. He kept his loss per share forecast for the quarter unchanged at 2 cents but dropped his estimate for the fiscal year to a 9-cent per share loss from a 6-cent loss. Sun's own forecast is a modest sales increase from the second quarter's $3.1 billion, and "progress" on a return to fourth-quarter profit from the second quarter's 3-cent loss per share, before one-time charges. Forecasts by analysts polled by First Call range from breakeven to a loss of 3 cents per share, with a consensus forecast of a 2-cent per share loss on $3.2 billion in revenue. "Demand in the U.S. appears to be particularly weak, perhaps reflecting traditional seasonality and a letdown following relative strength last quarter due to some Sept. 11 push-outs," Sacconaghi wrote. Sun was having trouble meeting demand for its low-end v880 machine, built to head off Microsoft's move into the high-end server market, but some resellers suggested that Sun could miss its forecasts if it did not deliver products as anticipated, Sacconaghi reported. Merrill Lynch analyst Steve Milunovich raised similar issues in his report, although he didn't change his forecast of a 2-cent loss per share on $3.25 billion in revenue. "Business is weak, especially as CIOs (chief information officers) sit on their hands," Milunovich wrote, reflecting Wall Street's realization that a recovery in corporate technology spending is slow in coming at best. "Despite management's trying to avoid more layoffs, employees and the channel expect cuts. We understand that management is hoping to put off cuts until summer when its next fiscal year begins, which may be a mistake," Milunovich added.