Big Quarterly Losses for Sun Microsystems

Sun Microsystems (News - Alert) gave a sneak peak of their quarterly report, saying the company was hit hard in the first fiscal quarter. Sun also plans to write down the value of its business, shares fell more than 8 percent in after-hours trading.

 

The Santa Clara-based company is scheduled to release its earnings Oct. 30^th. Sun said its loss will be between 25 cents and 35 cents per share for the three months ended Sept. 28^th, excluding one-time charges, the falls between 2 cents and 12 cents per share.

 

Analysts from Thomson (News - Alert) Reuters had polled a 1 cent per share loss. Sales were between $2.95 billion and $3.05 billion, lower than the average analyst prediction of $3.14 billion. Many analysts expected Sun to post dreary results for its quarter.

 

"People were expecting it could be a really, really horrific first quarter," said Rick Hanna, equity analyst with Morningstar Inc. "While it may have been a little better than the disaster scenario, I'm concerned about the long term and where Sun's going ... I'm concerned about their viability long-term and their ability to remain independent."

 

Sun had already warned Wall Street last quarter that it expected a sales decline and wouldn't turn a profit. Their strategy of developing free, "open-source" software and giving it away to spur sales of its high-end computer servers and support services hasn't paid off as investors would like.

Sun didn't detail which of its businesses would have their values written down. They only said that they will likely take an impairment charge on businesses that currently make up $1.8 billion of the $3.2 billion of Sun's total "goodwill," which refers to intangible assets like the company's reputation or perceived value in the marketplace.

 

Sun shares fell 48 cents, 8.3 percent, to $5.30 in after-hours trading after the company reported its results. The stock had gained 20 cents, 3.6 percent, to close at $5.78 during the regular trading session.