Investors who had been hoping that December marked the bottom of the IT spending slowdown probably didn't want to hear what

Sun Microsystems

(SUNW) - Get Report

CFO Michael Lehman had to say on Tuesday.

Speaking at the Unix-systems company's two-day analyst meeting in San Francisco, Lehman gave analysts a sober summary of how business has been proceeding lately. "We've been through January, and to be honest, January looked a lot like December," he said. "That's no surprise. Demand in the U.S. was not as exciting as we had hoped. Demand in Europe has been pretty healthy."

The unexpected slowdown in demand Sun experienced in December took its toll on the company's fiscal second-quarter results. Sun

missed revenue estimates and saw gross profit margins decline for the second straight quarter. The company at that time also tempered its guidance for 2001 sales to a range of 30% to 35%, down from what Lehman had described months earlier as "somewhere in the mid-30s."

From Sun's perspective, things remain as they were on the macroeconomic front. "This is what everybody is saying," Lehman said. "Everybody is saying they have less visibility into the current quarter than they did a couple months ago. We're not immune to that. I can't think of a company -- there may be one or two who claim they are -- that is immune to that. We don't set interest rates. We have to deal with this environment."

Visibility was poor enough to keep Lehman from giving any new guidance for the near term, during which he said Sun planned to keep up its aggressive pursuit of market share -- a strategy that, in view of the increasing competition the company is facing from companies like

IBM

(IBM) - Get Report

,

Hewlett-Packard

(HWP)

and

Compaq

(CPQ)

, could keep profit margins under pressure. "Our view is that the absolute numbers in the next couple quarters don't matter. No one can predict what those are going to be. What matters are the relative numbers. We're not losing business out there."

As for the long term? Lehman gave investors a gaping range of expectations for sales and earnings. "We believe we can grow the top line between 20% and 35% for the next two, three years," with operating earnings growing at a slightly faster rate during that time.

Sun's stock came off its highs on Lehman's remarks, falling about a point before regaining its footing. It was lately up 63 cents, or 2.2%, to $28.50.