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Pressure on Sun Rises as Earnings Continue Slide

After posting another quarter of poor earnings, Sun Microsystems Inc. faces more pressure than ever from both shareholders and IT customers to prove that it can recover the position it once held as a prospering computer company, technology analysts said on Thursday. While Sun has begun taking many of the right strategic and business operations […]

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Matthew Hicks

Apr 15, 2004

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After posting another quarter of poor earnings, Sun Microsystems Inc. faces more pressure than ever from both shareholders and IT customers to prove that it can recover the position it once held as a prospering computer company, technology analysts said on Thursday.

While Sun has begun taking many of the right strategic and business operations steps to recover from its slump, analysts said the Santa Clara, Calif., company still must prove that such changes as greater support for x86-based systems and the settling of its long-standing feuds with Microsoft Corp. can improve its financial picture. On Thursday, the company posted a loss of $760 million for its fiscal third quarter on revenues of $2.65 billion.

“The bottom line is, wherever it comes from, Sun’s running out of time to prove that [it] can make money,” said Gordon Haff, a senior analyst at Illuminata Inc., of Nashua, N.H. “They haven’t run out of time yet, but there is a recovery going on and others companies are doing better, but Sun is not.”

Analysts agreed that Sun, despite growing financial losses, is far from bankruptcy or insolvency. The company has billions in cash and has taken steps to shore up business. The biggest was its $1.6 billion settlement of antitrust and patent issues with Microsoft, an agreement reached earlier this month that included plans for the two companies to collaborate on technology.

“Sun and its product lines will be around for a long time no matter what happens to Sun as a corporation,” said Dana Gardner, a senior analyst at The Yankee Group, in Boston. “Sun might have to shrink and reconstitute itself, but there’s not too much risk of it going away.”

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Pressure on Sun Rises as Earnings Continue Slide

Matthew Hicks

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