Updated from 11:48 a.m. EDT
(ORCL - Get Report)
will have a major challenge breathing life into
ailing business, if the server and software firm's
are anything to go by.
The Santa Clara, Calif.-based firm posted a widening loss and saw its sales plummet well below analysts' estimates when it released its figures Tuesday.
Oracle sent shockwaves through the tech sector earlier this month when it threw down $7.4 billion to
the beleaguered tech giant, which had also been a
(IBM - Get Report)
Sun faces multiple challenges as it enters its last few months as an independent entity. Like the rest of the tech sector, the company is wrestling with an extremely difficult economy, and Sun's many rivals are looking to exploit the uncertainty that has surrounded the comany. To make matters worse, the third-quarter results also suggest that customers are sitting on their hands until Oracle CEO Larry Ellison unveils his grand vision for Sun's products.
"Weakness in the company's high-end servers [is] bleeding into its midrange and x86-based servers as well," wrote David Bailey, an analyst at Goldman Sachs, in a note released Wednesday.
Although Sun reduced its operating expenditure by 15% year over year, the firm's operating expenditure as a percentage of revenue increased by 3 percentage points, thanks to plunging sales. Citing that these trends are likely to continue, Goldman Sachs lowered its estimates for Sun, with the company now expected to post a loss of 50 cents a share in 2009, down from the previous estimate of a 16-cent loss. For 2010, the analyst firm predicts earnings of 11 cents a share, compared to its prior estimate of 25 cents a share.