Sun Reports $2.3 Billion Net Loss, But Operating ProfitSun Reports $2.3 Billion Net Loss, But Operating Profit

Sun Microsystems continues to stand alone as a self-described platform vendor up against the likes of Hewlett-Packard, IBM, and Microsoft, without an army of consultants that the other platform vendors employ.

Sun, which makes computers that manage networks, reported Thursday that revenue for its second quarter was $2.9 billion, down 6% from $3.1 billion in revenue for the second fiscal quarter of 2002. The net loss in the most recent quarter was $2.3 billion, more than five times the net loss in the corresponding quarter for 2002. The net loss per share for the same periods followed suit, growing from a loss per share of 13 cents to a loss per share of 72 cents.

However, a big chunk of the second-quarter loss was a $2.1 billion expense for the impairment of goodwill and other intangible assets. The company also posted a $357 million loss for previously announced restructuring and other items. Without such items, Sun on an operating basis would have earned $10 million, or break-even status on a per-share basis, better than Wall Street estimates. Excluding special items a year ago, Sun said it would have lost $99 million, or 3 cents per share.

For a platform company, Sun isn't selling enough tangible assets like servers and storage. Its proprietary, Unix-based equipment now competes with companies that sell increasingly powerful servers built on less-expensive chips and software. While CEO and president Scott McNealy spun a tale in a statement about sequential growth and down-the-line server sales performance, he didn't offer numbers to back it up. The company's stock price fell 75% in 2002 and closed Thursday at $3.70.

Still, Sun executives say the company continues to gain market share among companies that sell Unix-based servers. Sun also has branched out and started offering servers that run the inexpensive Linux operating system.

Sun also is battling Microsoft in a $1 billion private antitrust lawsuit. Sun claims Microsoft used its monopoly to stifle Sun's Java programming language, which lets software run on any platform regardless of its operating system.

U.S. District Judge J. Frederick Motz on Wednesday gave Microsoft 120 days to release a version of Java for the Windows operating system. It's not expected to have a material impact on Sun's business in the immediate future.