Sun to cut jobs after unexpected 3Q loss, Shares plunge

Sun Microsystems Inc. posted an unexpected loss in its third quarter because of wilting sales amidst poor U.S. economy. The company announced plans to abandon 1,500 to 2,500 jobs, in an attempt to rise from the financial funk.

Sun, the fourth-largest maker of server computers, reported a net loss of $34 million, or 4 cents per share compared to a profit of $67 million, or 7 cents per share in the same period, a year ago.

Disappointing orders from US customers were held responsible as were the costs relating to its takeover of the Swedish software firm MySQL.

"I'm disappointed," said chief executive Jonathan Schwartz. "Our third quarter was a challenging one in which US macroeconomic factors impacted our overall progress," he added.

Despite of thousands of previous job cuts, the company could not regain growth in revenue and the sales did not progress either.

Sales fell less than 1 percent to $3.27 billion in the third quarter, which ended March 30, missing the $3.38 billion average estimate.

Investors were displeased and shares dropped almost 15 percent in after-hours trading.
The Santa Clara-based server and software maker also forecast flat revenues for the fourth quarter.

According to Schwartz, some of the weakness during the third quarter flowed from small businesses in the U.S. holding down tightly on spending. "Smaller companies that could make discretionary decisions about (information technology) spending made discretionary decisions — they definitely tapped the brakes," Schwartz said, adding that slower-than-expected sales to government agencies also pulled down the results.

Sun dropped $2.73 to $13.60 at 9:30 a.m. in Frankfurt. The earnings were released after the U.S. markets closed yesterday. If a similar drop is recorded in the U.S. trading today, it will mark the largest decline in almost five years.