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Sun Micro posts loss on restructuring

The Santa Clara, California-based company said it had a net loss of $760 million, or 23 cents a share, for its fiscal third quarter ended March 28.
/ Source: The Associated Press

Sun Microsystems Inc. posted a larger-than-expected loss in its fiscal third quarter as the computer and software maker continued to lay off workers and reorganize amid blistering competition from rivals.

Sun reported a net loss Thursday of $760 million, or 23 cents per share, compared to net income of $4 million, or break-even per share, in the same quarter last year. The company reported revenue of $2.65 billion, down 5 percent from $2.79 billion in the same period of 2003.

The Santa Clara-based company spent more than $200 million during the quarter ending March 28 to pare its 36,000-member work force and reduce real estate costs around its pricey Silicon Valley headquarters. Chief executive Scott McNealy announced earlier this month that Sun would slash 3,300 jobs, or 9 percent of its staff.

Excluding special expenses, Sun lost $260 million, or 8 cents a share. Wall Street analysts polled by Thomson First Call were expecting Sun to report a third-quarter loss of $190 million, or 7 cents per share, on revenue of $2.65 billion.

Sun stock closed Thursday at $4.42 per share, down 3 percent, or 17 cents, on the Nasdaq Stock Market. In after-hours trading, it lost 11 cents, or 2.5 percent more.

Sun also announced Thursday the resignations of Mark Tolliver, 52, chief marketing and strategy officer; and Neil Knox, 51, an executive vice president. Sun appointed Anil Gadre, 47, as interim chief marketing officer and Brian Sutphin, 49, as vice president of corporate development.

Gadre and Sutphin will report to Jonathan Schwartz, Sun’s new chief operating officer and president. The ponytailed 38-year-old, known within the technology industry as a software visionary and a persuasive salesman, was promoted April 2, when Sun announced a $1.6 billion legal settlement with Microsoft Corp.

As part of the deal, Sun and Microsoft pledged to make software and hardware that was more compatible — addressing long-standing complaints from frustrated customers, who said the rivals’ products were incompatible. Sun executives said the deal would help boost flagging sales within several quarters.

For years, Sun chief executive Scott McNealy accused Microsoft of sabotaging his business, including by making Windows operating systems incompatible with Sun’s Java programming language. McNealy’s antitrust complaints helped spark the investigation that led to the EU’s $613 million fine against Microsoft last month for abuses of its virtual monopoly in desktop operating systems.

But it’s unclear whether the truce will help Sun, which is also being attacked by IBM Corp. and, to a lesser extent, by Hewlett-Packard Co., both of which offer consulting services that can take over the tech chores of a big business.

At the low end, Sun’s business has been eroded by the growing popularity of the cheap Linux operating system running on inexpensive Intel chips. Dell Inc., as well as IBM and HP, have been pushing such systems.