Sun Posts Loss, Troubles Not Over

Sun Microsystems Inc. suffered a net loss of $37 million for the quarter, slightly less than had been projected, as it continued to struggle from sagging sales of its Unix-based servers and workstations.

Sun executives said that while it expects sales to remain weak over the next few months, the companys optimistic that its efforts to reduce operating costs and improve gross margin percentages will eventually return the Palo Alto, Calif., company back to profitability.

"Despite the continued general economic uncertainties, Sun is improving its financial position while continuing to invest in product development and core competencies to promote the long-term growth of the company," Mike Lehman, Suns chief financial officer, said in a statement.

However, Wall Street analysts are predicting larger loses are ahead, with consensus estimates projecting a loss of 9 cents per share in the coming quarter, according to Thomson Financial/First Call.

For the just completed quarter, Suns net loss amounted to 1 cent per share on revenue of $3.11 billion. Market analysts had been projecting a loss of 2 cents per share, according to Thomson Financial/First Call. During the same period last year, Sun recorded a net profit of $136 million, or 4 cents per share.

Sun, which was a leader in selling hardware in the late 90s during the surge in Internet-based companies, saw a large portion of its income disappear when the dot-com bubble burst in 2000. For the first half of its fiscal year, Suns sales plunged 41 percent compared to a year earlier.

Despite sluggish demand for its products, Sun Chairman Scott McNealy said he remains confident the companys newer technologies and boosted promotional efforts will rekindle sales.

"Despite the challenging economic environment, weve protected our investments in R&D while winning customers in new markets," he said in a statement issued Thursday. "In addition to funding R&D, were making major investments in global marketing," citing Suns new "We make the Net work" ad campaign.