Sun's fiscal third quarter of 2008 reported a net loss of $34 million on a GAAP basis translating into a $.04 per share drop as compared with net income of $67 million, or $0.07 per share during last year's third quarter. Sun did report that the net loss included charges related to the acquisition of MySQL and the company would have had earnings of breakeven per share without this buy.

The company also reported a decline in quarterly revenue with $3.266 billion recorded for the 2008 third quarter, a decrease of 0.5 percent as compared with $3.283 billion during the same period last year. As a percent of revenues, total gross margin came in at 44.9, an increase of 0.4 percentage points as compared with the fiscal 2007's third quarter.

Despite clear disappoint in this "challenging quarter," Sun President and CEO Jonathan Schwartz did point out that this year's fiscal third quarter, which ended March 30, 2008, resulted in year-over-year revenue growth in 12 out of its 16 sales geographies, with double-digit revenue growth in key international markets across EMEA, Asia Pacific and the International Americas.

"The U.S. economy presented Sun with significant challenges in the third quarter, masking our progress in developing nations and economies across the world," Schwartz said. "With double digit year-over-year growth in India and Brazil, and triple digit billings year-over-year growth in our energy efficient, Solaris-based Chip Multi-Threading (CMT) systems, Sun made considerable progress during the quarter. We continue to invest in the future created by open alternatives to proprietary technologies, best exemplified by the acquisition of MySQL. The world is moving to open source innovation, and Sun continues to lead that revolution."

The fiscal third quarter report included a $52 million dollar tax provision, as compared to a tax benefit of $3 million the previous year.

Cash generated from operations was $329 million, and the cash and marketable debt securities balance at the end of the quarter was $3.801 billion. During the third quarter, Sun continued to leverage its cash position, spending $300 million to repurchase 17.5 million shares of its common stock. There is currently $500 million remaining of the $3 billion share repurchase program announced in the company's fiscal fourth quarter of 2007.

"Our third quarter was a challenging one in which U.S. macroeconomic factors impacted our overall progress," Schwartz told analysts on a conference call after the earnings report. "I'm disappointed."

During the call, the company indicated it would be reducing its workforce by 1,500 to 2,500. Sun will take a charge of $130 million to $220 million in its fiscal fourth quarter to account for the cuts, executives said. Listen to Sun's executives talk about the third quarter fiscal year 2008 earnings results in a replay of the conference call. [...read more...]

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