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Friday, 18 January, 2002, 16:26 GMT
Sun Microsystems unveils hefty loss
Sun Microsystems Fire 4810 server
Sun's Fire 4810 Server, used in internet data centres
Sun Microsystems, the world's leading maker of computer network servers, has reported a hefty loss, wrapping up a grim week for the technology sector.

The company said that one-off costs due to job cuts and other measures pushed it $431m into the red during the final three months of 2001, compared with a $423m profit a year before.


Despite economic uncertainties, Sun still is investing in product development and core competencies to promote the long-term growth of the company

Michael Lehman, chief financial officer

Excluding these one-off costs, the loss narrowed to $99m, compared with a profit before charges of $494m during the final three months of 2000.

The company, which has now made a loss for three consecutive quarters, also reported a drop in sales to $3.1bn, from $5.1bn one year earlier.

Analysts blamed the profits and sales slump on swingeing cutbacks in corporate technology investment since the onset of the global economic downturn this time last year.

Difficult week

Sun's deteriorating performance is the latest in a string of downbeat tech sector news this week.

The world's leading semiconductor maker Intel said on Tuesday that it planned to cut capital investment by nearly one quarter to $5.5bn this year, while on Thursday software giant Microsoft said it was "concerned" about the health of the global economy.

On Friday, tech market monitors Gartner Dataquest added to the gloom by reporting that global sales of personal computers fell last year for the first time since 1985.

Positive results on Wednesday from the world's number two computer maker Compaq and its rival Apple were not enough to outweigh investor gloom, leaving many technology stocks nursing heavy losses as the week draws to a close

But Dell provided more cheery news on Friday, predicting a 50% rise in shipments to consumers in the quarter ending 1 February, and saying sales should come in at $8bn, up $0.4bn from previous predictions.

Sun Microsystem's own shares came under heavy selling pressure soon after it announced its latest losses, falling $0.38 to $11.98 in early US trade.

The company's shares hit a peak of around $64 in 2000.

Reassurance

Sun attempted to reassure investors, pointing out that its most recent losses came in below some analysts' expectations.

The company, which aims to return to profitability by the end of June, added that it was cautiously optimistic that the business climate would improve over the next three months.

"We expect to make progress... toward our stated goal of returning to profitability by the June quarter," said Sun's chief financial officer Michael Lehman.

"Despite economic uncertainties, Sun still is investing in product development and core competencies to promote the long-term growth of the company."

See also:

18 Jan 02 | Business
Global PC sales slump
16 Jan 02 | Business
Intel posts sharply lower profits
26 Apr 01 | Business
Sun to close for a week
20 Apr 01 | Business
Sun reports lower profits
24 Jan 01 | Business
Microsoft settles Sun dispute
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