Sun vows return to profitability

Sun Microsystems unveiled its second-quarter results for the 2002 financial year, reporting slightly higher-than-expected revenue...

Sun Microsystems unveiled its second-quarter results for the 2002 financial year, reporting slightly higher-than-expected revenue for the quarter, but still posting substantial losses compared to the same period last year.

Sun's chief financial officer, Michael Lehman said the company was on track to report a return to profitability in its fourth quarter. "We have clearly made real progress over the last 90 days," said Lehman.

Sun's revenue for the quarter, which ended 30 December 2001, was $3.1bn (£2.15bn), a decrease of 39% compared to the second quarter of the previous year.

Net losses for the quarter - excluding investment losses, restructuring costs, and one-off charges - amounted to $99m (£68m), a decrease of 121% compared to the net earnings per share in the same quarter last year.

Sun executives highlighted the successful integration of new products into their range of offerings, as well as a substantial reduction in inventory.

During the quarter, Sun launched products and services including the Sun Open Net Environment (ONE), designed to help developers create and deploy applications over the Web, and started volume shipments of the Sun Fire 15K and V880 servers.

However, Sun's chairman and chief executive officer, Scott McNealy, said that the terrorist attacks of 11 September, fierce market competition, and hefty restructuring charges posed serious challenges during the quarter.

"I'm kind of glad we put that year behind us," McNealy said.

Besides a sluggish economy and the effects of 11 September, Lehman said that increasing worldwide competition was hitting profit margins. But McNealy seemed confident that Sun could triumph over rivals, especially IBM.

"We are in a ground war with IBM Global Services," McNealy said, "and we're not going to back off."

McNealy cited the company's focus on products, its partnerships and the Sun-initiated Liberty Alliance Project, which aims to create a common technology for identifying users on the Internet.

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