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Sun losses mount as high-end system fall

Microscope contributor

Sun Microsystems has recorded a fiscal second quarter loss as purchases of high-end systems were deferred by cautious customers adopting a wait and see policy before upgrading their infrastructure.

The troubled US vendor saw revenues for the three months ended 28 December tumble 10.9% to $3.2bn and losses of $209m including a restructuring charge of $222m related primarily to the restructuring announcement made in November.

"Overall results for Q2 were in line with what we expected as macro worries factored into customer discussions across all geographies," said Sun CEO Jonathan Schwartz in a teleconference with analysts.

"These concerns resulted in decisions related to higher end systems purchases being pushed out so billing were down year over year for Sparc enterprise servers alongside the storage and services businesses attached to them," he added.

Areas of the hardware business that sold well included the Solaris-based Chip Multi-Threading systems, which grew 31%, x64 servers grew 11%, the blade family grew 52% and billing for open storage rose 21%.

However it was software sales that were set aside for special mention as the "shining light" in the quarter as total billings grew 21% year-on-year and 52%. Java billings went up 48%, MySQL and infrastructure billing grew soared 55%.

Schwartz said more and more customers were showing an interest in free and open source software in the midst of the economic downturn and claimed discussions with customers had "substantially heated up".

"This is no longer a peripheral discussion with CIOs, cost reduction related to open source adoption has become a focal point for decision makers across the world," he added.

In fiscal Q1, Sun posted a loss of $1.7bn including $1.445bn non-cash charge for goodwill impairment and $63m in restructuring charges.

Related Topics: Desktop PCs, VIEW ALL TOPICS

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