SAN FRANCISCO - Sun Microsystems Inc.'s wobbly financial performance has done little to hearten investors over the past couple of quarters. But Wall Street found some joy in the server and software maker's latest results: sales weren't as bad as expected during the last three months of 2008.
Sun's shares jumped more than 6 per cent Tuesday in extended trading.
The Santa Clara-based company said after the market closed that it skidded to a loss of US$209 million in its fiscal second quarter. A big charge for job cuts and falling demand for servers and data-storage machines dragged down the results.
The loss amounted to 28 cents per share in the latest quarter. In the comparable period a year earlier, Sun had a profit of $260 million, 31 cents per share.
The latest figures include a $222 million restructuring charge. Sun, the world's fourth-largest server maker, revealed in November that it is cutting up to 6,000 of its 33,000 workers over the next year. The cuts will save the company up to $800 million a year.
Without one-time charges, Sun said it earned 15 cents per share. The figure didn't directly compare to analysts' forecast for a loss of 10 cents per share, because some analysts included charges that Sun excluded.
The results illustrate the challenge facing Sun as it tries to overhaul its business during a recession that has damaged bigger and sturdier rivals. One of those rivals is IBM Corp., whose mainframe and server sales have suffered as corporations chop their technology budgets.
Sun's sales fell nearly 11 per cent in the latest quarter to $3.22 billion. But that was slightly better than analyst estimates.
Sun's server revenue fell 14 per cent to $1.37 billion in the latest period. Storage revenue fell 13 per cent to $570 million.
"While things were certainly on paper better than what Wall Street had forecast, I'd be hard pressed to try to say that the fundamentals are improving at Sun," said Brent Bracelin, an analyst with Pacific Crest Securities. "You could make the argument that they continue to erode."
The last three months of 2008 were tough for hardware makers.
Sales from IBM Corp.'s hardware division declined 20 per cent during the period. Data storage company EMC Corp.'s sales rose slightly during the latest quarter, but it is laying off 2,400 people, or 7 per cent of its work force, and isn't giving financial guidance because of the uncertainty of the market.
Sun isn't giving detailed guidance either. The company would only describe the current quarter as "challenging," and said sales were expected to decline again, at least in line with seasonal trends.
In the past few years, Sun's sales have slipped between 5 per cent and 10 per cent from the fiscal second quarter, which ends in December, to the third fiscal quarter, which ends in March.
Consistent profitability has eluded Sun since the dot-com bubble burst in 2000, pulverizing demand for its high-end servers and sending Sun into a brutal slump during which the company lost more than $5 billion. Sun turned a corner, though, pulling together six profitable quarters in 2007 and 2008.
The latest financial crisis, however, has sent the company back into the red.
In the last two quarters, Sun has lost $1.9 billion on $6.2 billion in sales.
Sun shares finished the regular trading session up 21 cents, or 5.6 per cent, at $3.99. The shares rose to $4.25 in extended trading.
