Sun Microsystems has issued a first quarter sales warning and
admitted its losses may be higher than expected.
The
struggling firm, which has already shed thousands of staff and
has seen server sales continually slump, says it has been hit by
the recession. Sun watchers, however, may feel the company is in
terminal decline, as
Sun has been losing money for some time.
For the first quarter ended 28 September, Sun says it expects to
report sales in the range of £1.73bn to £1.79bn, compared with
£1.89bn seen in the first quarter last year.
Sun anticipates a net loss per share in the range of £0.15 and
£0.21, and that is before a planned asset goodwill write-off
associated with the £2.35bn takeover of StorageTek three years
ago.
Net losses per share include a restructuring charge of about
£35m linked to the restructuring announced on 1 August.
On the write-off, Sun said, "Based on a combination of factors,
including the current economic environment, Sun's operating
results, and a sustained decline in Sun's market valuation, the
company has concluded that it is likely that the fair value of one
or more of its reporting units [StorageTek] has been reduced below
its carrying value.
"As a result, Sun is currently conducting an interim goodwill
impairment analysis to determine the required amount of the
non-cash impairment charge, if any. As of 28 September, prior to
the impact of this potential non-cash impairment charge, Sun's
total goodwill balance was £1.88bn, of which £1.06bn relates to
reporting units that may be impaired."
Jonathan Schwartz, under seige CEO of Sun Microsystems, still
managed to find a silver lining amid the gloom. He said, "Sun and
its customers are seeing the impact of a slowing economy. We
believe we are positioned to offer the kinds of products that can
radically help customers reduce expenditures for their
infrastructure, from open storage and Solaris-based Chip
Multi-Threading systems to offering the most eco-efficient systems
in the market."
A familiar mantra from Schwartz, which may not be enough to
preserve Sun's reputation in the market. The first quarter results
will be posted on 30 October.