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Sun Microsystems’ losses narrow

November 7, 2009 1:41am
by Richard Waters

Things at Sun Microsystems do not seem to be quite as bad as Larry Ellison has been suggesting.

The Oracle boss said in late September that Sun was losing $100m a month as European regulators put its $7.4bn acquisition on hold. Then, a month later, Sun announced plans to sack 3,000 workers - a move that was widely seen as having been caused by the European delay.

The latest quarterly figures from Sun, filed with the SEC on Friday, paint a slightly different picture.

True, revenues are still falling hard, down 25 per cent in the quarter.

But Sun’s net loss in the three months to the end of September narrowed to $120m. Also, its all-important gross profit margin in the systems division climbed by 6 percentage points, to 41 per cent. This shows that, while pricing pressures remain intense, Sun has been able to more than offset it with lower material and other costs.

It may also be wrong to blame the job losses on Europe, at least directly. Sun itself said it was making the cuts “in light of” the regulatory delay. That might simply mean that, with a deal no longer imminent, its board realised it had to act now to deal with the consequences of this year’s collapse in Sun’s business, rather than leave it to Oracle to take the same action later as part of its post-acquisition integration.

Certainly, the delay must be bad for Sun. But there is no evidence yet that it is suffering the sort of dramatic implosion about which Oracle’s supporters warn so darkly.

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November 7, 2009 1:41am in Computers, Tech, Tech Finance | Comment

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