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Revenue Dips at Sun Micro

The company swings to a loss.


Sun Microsystems


swung to a loss in its fiscal third quarter, as the computer maker's sales suffered from the slumping U.S. economy.

Sun's revenue declined 0.5% year-over-year to $3.26 billion in the quarter, below the average analyst expectation of $3.37 billion. Sun posted a loss of $34 million, or 4 cents a share, in the three months ended March 30. The results included a 4-cent-a-share charge related to its acquisition of MySQL.

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Analysts had expected Sun to earn 18 cents a share, but it wasn't immediately clear what items the estimate included.

The loss marks an unfortunate step backward for Sun, which finally returned to profitability last year after bleeding red ink for several years. In the fiscal third quarter of 2007, Sun earned a profit of $67 million, or 7 cents a share.

"The U.S. economy presented Sun with significant challenges in the third quarter masking our progress in developing nations and economies across the world," said CEO Jonathan Schwartz in a statement.

Schwartz said that the company achieved double-digit year-over-year revenue growth in India and Brazil, while the company showed positive revenue growth in 12 of its 16 worldwide sales regions.

Sun's inventories increased 30% year-over-year, and 16% sequentially, to $735 million. And the company's gross margin slipped to 44.9% from 48.5% in the fiscal second quarter.

Shares of Sun were off 21 cents, or 1.3%, to $16.12 in recent after-hours trading.