Wednesday, July 15, 2009

Sun warns of earnings below expectations in fourth quarter

Sun Microsystems has warned that earnings would fall below expectations in the fourth quarter, which is also likely to be its last as an independent company.

A Silicon Valley pioneer whose servers helped form the basis of the Internet and still power many large enterprises, Sun is close to completing a $7.38 billion sale to Oracle Corp after a series of huge losses pushed down its share price.

Oracle, which edged out International Business Machines Corp to buy Sun, predicts the acquisition will boost its profits.

Once one of Silicon Valley's most influential companies, Sun reacted later than competitors to a shift to low-price server systems. More recently, the company suffered more than competitors because many customers were concentrated in the hard-hit financial services sector.

Sun warned that its earnings for the period ended June 30 would be between six cents a share to 16 cents a share on revenue of $2.58 billion to $2.68 billion. Analysts had forecast a one-cent loss on revenue of $3.03 billion.

Oracle reiterated an estimate made in April that it expects the Sun acquisition to contribute more than $1.5 billion in operating profit in the first year, increasing to more than $2 billion in the second year.

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