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Sun Micro expects to post big loss

October 21, 2008|The Associated Press

Battered by competition and slowing demand, Sun Microsystems Inc. said Monday that it expected to report a big loss in its fiscal first quarter, dragging the server and software maker's results below Wall Street's forecast.

Sun also plans to write down the value of its business, a sign of the company's deteriorating competitive position and vulnerability to the economic meltdown. Shares fell more than 8% in after-hours trading.

The Santa Clara, Calif.-based company is scheduled to release its earnings Oct. 30, but it offered an early peek Monday. Sun said its loss would be 25 cents to 35 cents a share for the three months that ended Sept. 28. Excluding one-time charges, the loss was 2 cents to 12 cents a share.

That's worse than the loss of 1 cent a share that analysts polled by Thomson Reuters were expecting. Sales were $2.95 billion to $3.05 billion, lower than the average analyst prediction of $3.14 billion.

The results highlight the heavy challenges facing Sun, once a darling of the dot-com era, as it continues its nearly decade-long battle with deep financial problems and its high-cost business model.

Many analysts expected Sun to post dreary results for its quarter. But the worse-than-expected numbers renewed concerns about Sun's ability to survive if its troubles worsen.

The company is losing market share in servers, and the financial crisis in the U.S. has hurt a big part of its business. However, many analysts say Sun's slipping competitive position in some markets has hurt the company worse than the dour economic climate.

Sun shares fell 48 cents, or 8.3%, to $5.30 in extended trading after the company reported its results. The stock rose 20 cents, or 3.6%, to $5.78 during the regular trading session.

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