Sun Microsystems ( JAVA) announced weak preliminary results Tuesday as the server specialist streamlines its finances ahead of its acquisition by Oracle ( ORCL). Oracle threw down $7.4 billion for the Santa Clara, Calif.-based Sun earlier this year, and Sun is now looking to get charges off its books prior to the deal's conclusion. On a non-GAAP basis, Sun expects a fourth-quarter loss of between 6 cents a share and 16 cents a share, which excludes the impact of restructuring, stock-based compensation, lowered value of assets and acquisition-related costs. Analysts surveyed by Thomson Reuters had forecast a loss of 1 cent a share. Including charges, the Santa Clara, Calif.-based firm predicts a loss of between 24 cents a share and 34 cents a share. By clearing charges off its books, Sun is clearly looking to limit the acquisition's impact on Oracle's earnings. The deal, which is expected to close this summer, marks a strategic shift for Larry Ellison's company, which has built its business around software, not hardware. The Redwood Shores, Calif.-based firm sent shockwaves through the tech sector when it bought the beleaguered tech giant, which had also been a target for IBM ( IBM). Like many tech companies, Sun has been wrestling with the IT spending slowdown, and suffered widening losses in its recent third-quarter results. This trend looks set to continue, and Sun expects fourth-quarter revenue between $2.58 billion and $2.68 billion, down from $3.78 billion in the same period last year, and well below analysts' estimate of $3.03 billion.
Sun, which has earned a reputation for poor execution during recent years, is also coming under pressure from rivals eager to exploit its current predicament. "There's accelerated opportunities," said Steve Schuckenbrock, president of Dell's ( DELL) large enterprise business, during the company's annual analyst day Tuesday. "We have put programs in place to help customers migrate from Unix to Linux." Sun's shares were flat at $9.16 Tuesday, as the Nasdaq rose 0.21%. Oracle's stock dipped 7 cents, or 0.36% to $20.65. The server giant will hold a shareholder meeting to vote on the Oracle acquisition Thursday.