Sun posts quarterly loss of $209m

Sun has admitted to a "challenging" quarter

Sun Microsystems investors were shown a bright spot last night as the vendor's latest financial results managed to beat analyst predictions, despite its recent shaky financial performance.

The company posted a loss of $209m (£146m) in its fiscal second quarter as demand for servers and data storage machines dropped, and it absorbed significant charges for its latest round of lay-offs. In the same period last year, Sun posted a profit of $260m (£182m).

Sun saw its sales plummet almost 11 per cent to $3.22bn (£2.25bn) in the latest quarter, yet still managed to beat Wall Street estimates which had braced for worse.

The firm's server revenues were also down by some 14 per cent to $1.37bn (£959m), while storage revenues saw a 13 per cent slump to $570m (£399m). The past two quarters have seen Sun lose $1.9bn (£1.3bn) on sales of $6.2bn (£4.3bn).

Sun admitted in November that it would be forced to cut its 33,000-strong workforce by 6,000 in order to save some $800m (£560m) a year. The layoffs meant that the firm had to write down a $222m (£155m) restructuring charge, which also affected this quarter's results.

One-time charges aside, Sun managed to earn 15c a share, ahead of analyst predictions of a 10c per share loss, but most analysts were working on the basis of taking the firm's charges into account.

Sun added that it had ended the quarter with a cash and marketable debt securities balance of $3bn (£2.1bn) and generated $36m (£25m) in cashflow from operations for the second quarter of fiscal 2009.

The news was met with relief last night as investors took heart, pushing Sun's shares up six per cent to $4.25 (£2.97) in extended trading.

Sun will, however, hold back from offering any forward-looking financial guidance, except to point out that this current quarter was "challenging", and that the firm expected to see a further decline in sales in line with seasonal trends.