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To: maceng2 who wrote (167976)	5/24/2002 6:02:08 AM
From: maceng2	Respond to of 436258

Sun says IT spend still heavily constrained By Maija Pesola Sun Microsystems, the US computer maker, provided little relief for investors on Thursday, saying that its flow of orders in the current quarter was not proceeding as smoothly as in the previous three month period, as customers continued to keep a tight rein on information technology spending. In Thursday's mid-quarter update Sun said that it was still "hampered by heavily constrained IT spending", but reiterated an earlier forecast that it would return to profit by the end of the fourth fiscal quarter, to the end of June. The company said there was no need to change the fourth-quarter guidance it gave in April, when it said it expected a slight rise in gross profit margins from 42.1 per cent in the third quarter and an increase in revenues from $3.1bn. Nevertheless, in after-hours trading Sun shares fell to $7.09, wiping out their earlier gains on the Nasdaq, where they had closed at $7.41. Investors are keen to see signs of pick-up at Sun, which is is the leader in selling computer servers using the Unix operating system. A large part of the company's customer base was made up of companies running e-business software and internet-based services such as websites, and it suffered heavily from both the dotcom crash and the capital crunch in the telecommunications sector. The company recently announced plans to cut its workforce by 1,000 in the face of the slowdown in spending. These cuts follow 3,900 redundancies announced in mid-October, and there is evidence that the measures are bearing fruit, with gross margins starting to improve. However, the recent departure of four senior executives, including Ed Zander, the company's president and chief operating officer, who resigned at the beginning of May, has added to concerns about the company's ability to stage a turnround. news.ft.com