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Last Updated: Wednesday, 26 July 2006, 06:18 GMT 07:18 UK
Revamp costs hit Sun Micro profit
Exterior view of Sun Microsystems headquarters in Santa Clara, Calif
Sun says efforts to turn around the business are bearing fruit
US computer company Sun Microsystems has swung into the red as a result of the cost of thousands of job cuts.

The group posted net losses of $301m (163.5m) for the three months to 30 June, against a $50m profit in 2005.

The company is in the middle of a huge restructuring plan costing 5,000 jobs, as part of a bid to end five straight years of losses.

Excluding one-off costs, the group would have broken even as sales increased 15% to $1.81bn.

Elsewhere, revenues rose 29% $3.83bn from $2.97bn, topping analyst expectations of $3.6bn.

Business improving

"We're making excellent progress returning Sun to growth and profitability," chief executive Jonathan Schwartz said.

"Revenue, bookings and backlog are all up substantially - indicating we're gaining traction, market confidence and share."

Sun had warned the shake up of the company would cost at least $500m in coming quarters when it launched the revamp in May.

In the latest results, restructuring costs came in at $288m.

By trimming 13% of its workforce, the group expects to yield annual cost savings of up to $590m.

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