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Nov-07-2009Sun Micro sales take hit as Oracle merger drags out(topic overview)
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NEW YORK, Nov 6 (Reuters) - Computer maker Sun Microsystems Inc (JAVA.O: Quote, Profile, Research ) suffered a 25 percent fall in quarterly revenue, as uncertainty over its delayed sale to Oracle Corp (ORCL.O: Quote, Profile, Research ) hurt its business. Lower operating expenses helped Sun Microsystems curb its fiscal first quarter loss to $120 million, or 16 cents a share compared with $1.68 billion, or $2.24 a share, a year earlier, according to a filing with the U.S. Securities and Exchange Commission. [1] "The decrease in _____ revenue was primarily due to _____" and "uncertainty associated with the proposed acquisition by Oracle and increased competition." That refrain is repeated over and over again in Sun???s latest grim earnings report, which was filed without much in the way of announcement Friday afternoon. According to a 10-Q filing with the Securities and Exchange Commission, Sun (JAVA) lost $120 million, or 16 cents a share, on revenue of $2.24 billion in its first quarter.[2] "Our first quarter of fiscal year 2010 results continued to be affected by the economic downturn, the uncertainty associated with our proposed acquisition by Oracle, increased competition and delays in customer purchasing decisions," Sun said in a statement on Friday. Oracle Chief Executive Larry Ellison recently said that Sun is losing about $100 million a month because of uncertainty about its future, as European antitrust regulators pursue an in-depth probe of the deal.[1]
The decrease in Storage Products revenue during the first quarter of fiscal 2010, as compared to the corresponding period in fiscal 2009, was primarily attributable to the economic downturn as projects were scaled back, delayed or canceled, in addition to the uncertainty associated with our proposed acquisition by Oracle and increased competition.[2]
The decrease in revenue during the first quarter of fiscal 2010, as compared to the corresponding period in fiscal 2009, was primarily due to decreased sales of our enterprise Server Products, storage disk products and Services.[2]
The Santa Clara, California-based company reported a net loss for the first quarter of $120 million or $0.16 per share, compared to a loss of $1.68 billion or $2.24 per share in the year-ago quarter. [3] Exuding items, the company's non-GAAP net income for the quarter was $15 million or $0.02 per share, compared to non-GAAP net loss of $62 million or $0.08 per share in the same quarter last year.[3]
Total net revenues for the quarter dropped 31% to $2.62 billion from $3.78 billion in the comparable period last year. Among the competitors, software giant Microsoft Corp. (MSFT) reported a first-quarter profit that declined to $3.574 billion or $0.40 per share from last year, as the company deferred a portion of its revenue related to the Windows 7 Upgrade Option program.[3]
On average, seven analysts polled by Thomson Reuters expected the company to report a loss of $0.23 per share for the quarter.[3]
Sun Microsystems Inc.' s (JAVA) fiscal first-quarter loss narrowed despite another decline in revenue, as the hardware and software company recorded much smaller unusual charges. The company recently said it will cut 10% of its work force because of delays in its $7.4 billion sale to. [4] Analysts had been expecting earnings of 25 cents a share on revenue of $2.31 billion. Oracle (ORCL) CEO Larry Ellison recently said that Sun is losing about $100 million a month as it waits for European antitrust regulators to approve its acquisition by Oracle.[2] The Oracle boss said in late September that Sun was losing $100m a month as European regulators put its $7.4bn acquisition on hold.[5]
Sun Microsystems is being acquired by database giant Oracle (ORCL), in a deal that has been prolonged for quite some time, primarily due to the European Commission going for an in-depth investigation into the deal. Sun Microsystems, known for its UltraSPARC processor-based servers, Solaris operating system and and Java technology, was founded in 1982 by Stanford University graduate students Vinod Khosla, Andy Bechtolsheim and Scott McNealy.[3] A former New York bureau chief for the FT, he is intrigued by Silicon Valley's unique financial and business culture, and is looking forward to covering his second Tech Bust. He joined the FT's San Francisco bureau in 2008 and writes about social networking, clean tech and artificial intelligence. Based in London, she covers European tech companies and hopes that they won't all get acquired by American rivals. He spent a decade covering tech for the Los Angeles Times and therefore remembers the days when pre-revenue dot-coms handed out free bottles of champagne at their launch parties. Before that, he was an FT editorial writer in London, having previously worked for various banks and asset managers. He is interested in the intricacies of the technology supply chain and how China is increasingly changing the tech landscape. Based in London, he has covered start-ups such as Twitter and Spotify, as well as the online ambitions of more established media companies, such as the BBC iPlayer. He also covers the advertising, marketing and video-game industries.[5] FT techtalk A live multimedia and text conversation, combining the views of the FT's tech correspondents with reader comments and questions on the week's technology news, every Friday, at 0800 Pacific time (1500GMT, 1600BST).[5]
A sale to Oracle was seen as a way to transform Sun into a diversified technology company selling computers alongside Oracle's software. [1] During the same period a year ago, Sun lost $1.68 billion, or $2.24 a share, on $2.99 billion in sales.[2] Revenue fell to $2.24 billion from $2.99 billion in the same quarter a year earlier, and was lower than the average analyst estimate of $2.34 billion, according to Thomson Reuters I/B/E/S.[1] Total net revenues for the quarter decreased to $2.24 billion from $2.99 billion in the prior-year quarter.[3]
Eight analysts had a revenue consensus of $2.34 billion for the first quarter.[3] Revenues for the quarter were $12.92 billion, down from $15.06 billion in the prior year quarter.[3]
Oracle's total revenue last quarter fell 5 percent from a year earlier, while chipmaker Intel Corp's (INTC.O: Quote, Profile, Research ) revenue fell 7.8 percent.[1]
In the immediately preceding quarter, Sun reported a loss in the fourth quarter with a decline in revenues.[3]
Sun's net loss in the three months to the end of September narrowed to $120m. Its all-important gross profit margin in the systems division climbed by 6 percentage points, to 41 per cent. This shows that, while pricing pressures remain intense, Sun has been able to more than offset it with lower material and other costs. It may also be wrong to blame the job losses on Europe, at least directly.[5] Net loss for the quarter included purchased in-process research and development, amortization of acquisition related intangibles, stock-based compensation, restructuring and related impairment of long-lived assets, impairment of goodwill, gain or loss on equity investments, settlement income and tax effect of non-GAAP adjustments.[3]
Sun itself said it was making the cuts "in light of" the regulatory delay. That might simply mean that, with a deal no longer imminent, its board realised it had to act now to deal with the consequences of this year's collapse in Sun's business, rather than leave it to Oracle to take the same action later as part of its post-acquisition integration. [5]
SOURCES
1. UPDATE 2-Sun Micro sales fall, Oracle deal delay stings | Reuters
2. Sun Earnings Crash on Delayed European Okay of Acquisition by Oracle | John Paczkowski | Digital Daily | AllThingsD
3. RTTNews - Latest Earnings,Upcoming Earnings, Pos Pre Announcements, Pos Pre Announcements , Positive Surprises, Negative Surprises, Hot Stocks, Stock Split Calendar, Stock Buybacks, Dividends, Negative, Positive PreAnnouncements,Surprises .
4. Sun Microsystems Loss Narrows On Smaller Items, Rev Drops - WSJ.com
5. FT.com | Tech Blog | Sun Microsystems' losses narrow
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