Sun Microsystems Sees Meeting Second-Quarter Expectations

Shares of Sun Microsystems (SUNW Quote) fell more than 3% in the last half hour of trading after the company told analysts that its "demand is strong," and that the company is on track to meet earnings and revenue expectations in its fiscal 2001 second quarter.

That might sound odd. But Sun is falling victim to its history of raising guidance at its briefings with analysts and investors.

"It's been an unspoken expectation that in the middle of the quarter, Sun will tell analysts that things are going great and that maybe they ought to be fine tuning their estimates," said Richard Chu, an analyst at SG Cowen. "Whether or not they intended that, this time, they stood pat."

Sun said it expected its revenue to grow in the high-40% range, just as it did on its earnings conference call last month.

That's the problem with doing a great job. Sooner or later, people come to expect it.