Sun Microsystems Forecasts Loss; Slowdown Cited
Sun Microsystems Inc., blaming components shortages and slowed production, said Thursday that it may report a loss in the current quarter.
Stock in the Mountain View, Calif.-based company, a top maker of computer workstations, fell $1.25 on the news to $20.75 a share as the most actively traded issue in the over-the-counter market.
Income for the fourth quarter ending June 30 “will be significantly below the results for the same quarter a year ago and the company could experience a slight loss, depending upon revenue levels,” Sun said in a statement.
Sun said revenue for the fourth quarter is expected to fall below levels analyst forecast and possibly below the $497 million it reported its third quarter ended March 30.
Technology analysts had estimated that the company would earn between 25 cents and 40 cents per share in the fourth quarter. In the comparable 1988 quarter, Sun earned $25.3 million, or 66 cents a share, on revenue of $365.1 million.
The company cited several factors for the expected shortfall, including slowed production because of switching to a new management information system. Sun also said it introduced five new products in the quarter, making it difficult to forecast its product mix.
Unexpected Strain
Production of the new entries was impeded by insufficient supplies of some components and continuing strong demand for Sun’s traditional products, which caused the unexpected strain on its manufacturing capabilities, it said.
“These factors have hindered Sun’s ability to assess accurately the company’s incoming orders, to forecast and to schedule production efficiently,” Sun said.
The company said it expects the current problems will be confined to the fourth quarter and is not encouraging analysts to change expectations for fiscal 1990, which it expects will be an excellent year.
Analyst Mark Stahlman of Sanford C. Bernstein & Co. said Sun will break even if revenue falls in the range of $460 million.
“These are things that take months to adjust but after they get the right parts and shift the mix around on the production line, this will not be a killer issue.”
