Dark Clouds Gather Over Sun

Sun issues a gloomy assessment for the current quarter and a darker outlook for the future as the company's CFO warned that the market for its high-end servers may decline even further.

Sun Microsystems Inc. Thursday issued a gloomy assessment for the current quarter and a darker outlook for the future as the companys chief financial officer warned that the market for its high-end servers may decline even further.

"Weve not seen any improvement in the current IT spending environment. In fact, some would say it might actually be worsening," Steve McGowan, Suns chief financial officer said during a mid-quarter conference call with analysts Thursday.

The maker of Unix-based workstations and servers, based in Palo Alto, Calif., has been among the major companies most severely hurt by the downturn in IT spending that paralleled the dot-com collapse. In July, Sun finally posted its first profitable quarter after months of running in the red, but still ended its fiscal year with a net loss of $628 million. In addition, Sun projected it would fail to make a profit this quarter.

For the current quarter, Sun projected that sales would decline up to 15 percent from the $3.4 billion it posted last quarter. While Sun didnt update its earlier projections calling for a slight loss for the quarter, it appeared clear that the loss would be worse than previously expected.

In order to address projected revenue shortfalls, McGowan said Sun would look at new ways to further trim its operating expenses, raising speculation that the company will lay off more workers in addition to the 1,000 job cuts it previously announced for this year. Last year, the computer maker let go about 4,000 workers, leaving it with a work force of about 40,000 worldwide.

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