Sun cuts earnings in "recession"

Sun Microsystems has slashed its forecast for its third quarter earnings blaming the sluggish US economy.

The company warned that earnings per share for its current quarter would be between seven and nine cents, significantly lower than the 15 cents a share Wall Street analysts had predicted.

In a meeting with investors, chief financial officer, Michael Lehman, became the first senior executive of a high-tech firm to describe the US's current economic woes as a "recession". He said, "We have not seen such widespread or sudden change in IT spending."

The technology firm also said its third quarter revenue would only grow between 10 and 13 per cent, compared to the 35 per cent growth rate it enjoyed in the same quarter last year.

Sun said it plans to reduce the number of new recruits joining the company from around 2000 during the third quarter to less than 500 in the fourth quarter. Recruitment would be limited to areas such as research and development, sales and engineering services.

Last month, Sun reported a 44 per cent increase in its second quarter revenue to $5.12bn, and warned that sales over the next six months would be slow.