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

To: Lynn who wrote (48411)	4/19/2002 8:18:03 AM
From: Bald Eagle	Respond to of 64865

NEW YORK -(Dow Jones)- Sun Microsystems Inc.'s (SUNW) fiscal third-quarter revenue came in at the low end of the company's target, but its gross margins, which increased 5.5 points sequentially, impressed some Wall Street watchers. "Certainly the biggest surprise for the quarter is the astounding improvement in gross margins," said Richard Chu, an analyst at SG Cowen. Gross margins climbed to 42.1% in the March quarter from 36.6% in the December quarter. The company is forecasting a slight sequential increase in margins in the June quarter. Earlier Thursday, Sun Micro, Palo Alto, Calif., posted a net loss of $37 million, or a penny a share, for the quarter ended March 31, compared with a profit of $136 million, or four cents a share, in the year- earlier quarter. Excluding items, Sun said it lost $26 million, or a penny a share, compared with year-earlier earnings of $145 million, or four cents a share. Analysts surveyed by Thomson Financial/First Call were anticipating a loss of two cents a share for the March quarter. Revenue fell to $3.11 billion from $4.09 billion a year earlier. At its mid-quarter update in early March, Sun reiterated an upbeat forecast it issued in January, when it said it expected revenue for the fiscal third quarter to come in above the $3.1 billion it had posted for the December quarter, though it didn't say by how much. The company also said it expected to be profitable by June. Sun Micro Chief Financial Officer Michael Lehman attributed the improvement in gross margins in its fiscal third quarter partially to a reduction in costs associated with product transitions and lower inventory levels. George Elling, an analyst at Deutsche Bank, said that Sun's unexpectedly strong gross margins will enable Sun to turn a profit in its fourth quarter even on lower revenue. During a conference call with the press following the release of Sun's results, CFO Lehman said the company's revenue growth is based on multiple factors. He said the improvement in margins in the latest quarter is a "big part of the reason we feel comfortable that (Sun's) still on track in the June quarter." The computer hardware and software maker said Thursday it continues to expect to return to profitability in its fourth quarter and is targeting a slight increase in revenue. Elling said Sun's third-quarter revenue, which came in flat with the second quarter, was a disappointment. But compared with its peers, Sun is performing as well as anyone, he said. Both Elling and SG Cowen's Chu said the Sun is being careful with its outlook. "The revenue guidance for the June quarter is very cautious," said Chu. Sun is "talking about a slight increase, and seasonally the June quarter is up pretty strongly." Elling noted that Sun realizes that information technology spending remains uncertain. "Nobody wants to go out and give a bold predication," he said. Shares of Sun Microsystems traded at $8.26 in after-hours action, according to the Island ECN. The stock finished the regular session at $8.52, up 3.5%, or 29 cents.