Sun Loses $88 Million In 4QSun Loses $88 Million In 4Q

How bad is the IT economy? Sun Microsystems lost $88 million inits fiscal fourth quarter ended June 30, while its revenue fell 20% to $4.0 billion, and Bear Stearns financial analyst Andy Neff thinks Sun's management deserves a pat on the back. "Under the current economic conditions it looks pretty darn good," says Neff.

Much of Sun's loss came from the costs of acquiring Highground Software. Without that and other one-time expenses, the company earned $134 million pro forma net income. For the year, which included a couple quarters from calendar 2000, things looked better: Revenue of $18.25 billion, 16% higher than the prior fiscal year, but net income of $927 million that was almost 50% less the previous year.

Scott McNealy, chairman and CEO at Sun, has given up predicting when IT executives will start buying again and when the economy will turn up. "[Federal Reserve Chairman Alan] Greenspan has all the information in the world," he says, "and he doesn't have a clue."

Ed Zander, president and chief operating officer at Sun, admitted that the company took until the end of the quarter to get new SunFire 6800 servers out in volume. He says the company has an opportunity by shifting much of the sales force away from slumping telecommunications, service provider, and hosting companies, and toward the Fortune 500 companies. "We looked at them all and realized we've never called on some of them," says Zander. Still, he hasn't completely given up on the Web-centric companies that fueled Sun's growth the last couple of years. Says Zander, "Betting against the Internet is like betting against the telephone company last century."