Sun Microsystems ( SUNW) said today that its revenue for the quarter under way was likely to slide as much as 15% or more sequentially, while offering bearish words on the outlook for technology spending. In July the server and storage vendor had predicted sales for the fiscal first quarter of 2003 would drop off 10% to 15%. But today on a conference call, CFO Steve McGowan said the sequential revenue decline would be "closer to the bottom end of the range, plus or minus a small amount." In after-hours trading, shares gave up 14 cents, or 3.7%, to $3.69. Earlier in the day the stock had lost 3.3% to close at $3.83. "We have not seen any improvement in the current IT spending environment. In fact, some would say it might actually be worsening," said McGowan on the conference call, adding that spending on "high-end, large-dollar projects" had slowed especially. He said revenue for the quarter would be about the same level as a year ago, when it totaled $2.86 billion. Leading up to the call, analysts were expecting sales in the fiscal first quarter to reach $3.07 billion, according to Thomson Financial/First Call. Sales at first-quarter 2002 levels would imply a 16% decline from Sun's most recent quarter. But McGowan noted that Sun's fiscal first quarter has historically been back-end loaded, meaning the bulk of sales occur toward the end. With five weeks left in the 13-week quarter, that means business trends for the quarter aren't entirely clear. In July, Sun unsettled investors when it said it would lapse back into the red for the current quarter, after briefly attaining profitability. Currently analysts expect the company to post a 1-cent loss. Despite the drop-off in revenue, Sun expects gross margins to stay flat with the prior quarter. Operating expenses shouldn't change significantly. The company said in its previous earnings call that it would let go 1,000 workers by December. Today, in response to analysts' questions, McGowan refused to speculate on whether the company might step up layoffs. "We'll see how Q1 turns out and what Q2 looks like, and we'll make decisions at that time," he said. Although it's little consolation,
financial results from giant hardware maker H-P released earlier in the week showed that its server and storage businesses were likewise under severe pressure, with sales having declined 8% sequentially in its most recent quarter.