Investors Getting Out of Sun

Updated from 1:13 p.m. EST

Shares of Sun Microsystems(SUNW Quote) slipped on heavy volume Tuesday in the wake of a massive after-hours sale the previous evening.

More than 173 million shares of Sun were dumped after the bell on Monday, including 150 million shares reportedly sold in a single block trade.

On Tuesday, the block trading continued, with 2 blocks totaling 13 million shares sold. Overall, Sun was recently off 9 cents, or 2.4%, to $3.80. It was the most actively traded Nasdaq stock, with nearly 64 million shares trading hands.

Only two institutional investors own more than 150 million shares of Sun: Capital Research & Management, which owns 250.8 million shares, and Barclays Global Investors, which holds 215.4 million shares.

A spokesperson for Capital Research said the firm doesn't discuss holdings or individual companies. A Barclays spokesperson said the company did not comment on trades but said that because of its status as the world's largest indexer, a great deal of the firm's holdings are predetermined by index providers, rather than on taking active bets on particular companies.

Sun last reported about 3.4 billion shares outstanding.

Shares of Sun, which has struggled to right itself since the dot-com crash, have fluctuated in a two-dollar range for the past year. Last week, the company reported another disappointing quarter with a $123 million loss. The company's revenue was up 4% year over year at $2.72 billion, but it still fell short of analysts' expectations. And without the benefit of a pair of acquisitions, Sun's core product sales were actually down 6% from the year before.

The selloff left many Wall Street analysts scratching their heads. The market for natural selling would be much more favorable during the day, rather than after hours. And if the sale was prompted by some development at Sun, the news would most likely have been announced in its quarterly earnings announcement.

"They just reported, so you would not anticipate that you would run into news events that quickly," said Needham & Company analyst Charles Wolf, who had been unaware of the block sale.