Sun Posts Narrower Loss as Sales Slip

Network computer maker Sun Microsystems Inc. on Thursday posted a narrower quarterly loss on revenue that fell less than expected.

Santa Clara, Calif.-based Sun had a net loss of $125 million, or 4 cents a share, in its fiscal second quarter compared with a year-earlier net loss of $2.28 billion, or 72 cents, which included $2.13 billion to write down goodwill and other items.

Revenue in the three months ended Dec. 28 fell 1% to $2.89 billion. That revenue figure topped cautious Wall Street expectations by 5%. But a rise in services revenue, to $944 million from $902 million, failed to offset declining product revenue, which dipped to $1.94 billion from $2.01 billion.

Shares of Sun fell 10 cents to $5.36 on Nasdaq. The stock rose to $5.44 in after-hours trading, then settled at $5.41.

“There were high expectations of recovery here and they delivered,” said Brent Bracelin of Pacific Crest Securities.

Excluding a restructuring charge, Sun posted a loss of 3 cents a share contrasted with no per-share profit or loss after a gain in the prior-year period.

Sun is trying to sell cheaper servers running the Linux operating system to compete against Hewlett-Packard Co. and Dell Inc., which sell machines with Linux or Microsoft Corp. software and Intel Corp. chips.

Sun earlier said it was laying off 300 workers at its Northern California manufacturing plant, and would move those operations to Oregon and Scotland. Sun has about 35,000 employees worldwide.

Also, an appeals court ruled that Sun cannot prevent facts favorable to its antitrust lawsuit against Microsoft from being contested, even though they were part of the federal government’s successful antitrust case.

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Associated Press, Bloomberg News and Reuters were used in compiling this report.