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First real rider of doom sighted

Sun Microsystems warns of profit failure

Sun Microsystems warned yesterday that slow order rates for the company's hardware, particularly in Europe and Japan, will make it tough for the company to post a profit in its first fiscal quarter.

This may seem an abstract concept, but for years Sun has been a stalwart of the IT industry. It's one of the biggest players, and if Sun is in trouble then the hoof-beats of the four horseman of the internet apocalypse should be audible.

"It will be a real stretch to hit that $3.7bn number, which we characterised as break even last quarter," said Michael Lehman, vice president and chief financial officer at Sun, during a conference call with press and analysts to provide a mid-quarter update on its business.

Sun has suffered as many telecommunications companies, service providers and financial services firms cut back their spending on its hardware products. And while government sectors have provided a bright spot for the company, overall sales have dipped to a point where Sun will struggle to meet even conservative revenue estimates, Lehman said.

Financial analysts expected Sun to report earnings of two cents per share on $3.8bn in revenue, according to a consensus estimate compiled by Thomson Financial/First Call. Sun is due to report its results October.

Business was at its weakest this quarter in Europe and Japan, while the USA and most other regions generated sales close to Sun's expectations, said Lehman.

Sun would not speculate on its results for the second quarter, saying only that new products and the continued roll out of its UltraSPARC III processor across its server and workstation lines should generate some improvement.

Sun plans to put a 900MHz version of the UltraSPARC III in some of its workstations later this quarter, Lehman said. Users can currently purchase a Sun Blade 1000 Workstation with the processor running at 750MHz.


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