Revenues for the first quarter were $2.861 billion, a year-over-year decrease of 43 percent. Net loss for the first quarter was $158 million and the net loss per share was $.05 (excluding losses on Sun’s strategic investment portfolio, facility disinvestments, in-process research and development charges, and related tax effects).
During the first quarter, special items increased the net loss by $22 million. The special items are comprised of a $19 million loss on Sun’s strategic investments, an in-process research and development charge of $3 million, and a facility disinvestment charge of $14 million. A decrease of $14 million in taxes related to the above-mentioned special items partially offsets these charges. Including these special items, the GAAP net loss was $180 million and the net loss per share was $.06.
Sun’s Chairman and CEO, Scott McNealy said, The current economic environment is very difficult but the strength of Sun’s vision and strategy create a competitive advantage. The computer industry continues to consolidate and downsize but Sun will stay focused on developing the technologies and products that have been the hallmark of our company, such as the binary compatible UltraSPARC[tm] III-based product line, ranging from sub-$1,000 systems to $10 million systems. This product line offers one of the most compelling total cost of ownership stories in the industry. In combining these systems with our award-winning Solaris[tm] Operating Environment, our Sun[tm] Open Net Environment (Sun ONE) software stack, our Enterprise Services business, and our Sun StorEdge[tm] hardware and software products, Sun stands as one of the few companies that can provide complete solutions to satisfy customer needs.
Furthermore, McNealy added, Numerous efforts are in place to support Sun’s ability to satisfy customers. These include our iForce[sm] services and SunTone[sm] programs which promote open solutions, and our Java[tm] 2 Platform, Enterprise Edition (J2EE[tm]) and Micro Edition (J2ME[tm]), which are the de facto standard for application development for the Internet. We recently announced the Liberty Alliance Project which provides an open, federated solution for network identity, and our Sun Sigma projects and quality initiatives have been placing Sun closer to customers, saving customers money, improving systems uptime, and expanding product portfolios to improve customer revenue potential. In addition, our just-announced Floor-Tile-Ready systems program for customer-specified system orders is resulting in reduced time to deployment, improved uptime, and faster resolution of customer issues.
McNealy continued, Our recent announcement of a two-year $100 million global sourcing pact with News Corporation is a good example of how Sun continues to provide value to customers with integratable solutions. Total cost of ownership, binary compatibility, and integratable solutions continue to be competitive strengths of Sun. We see many of our customers, such as Merrill Lynch, focusing on server consolidation programs. According to Merrill Lynch, server consolidation is a powerful lever in their overall drive to reduce total cost of ownership and Sun plays an important role in those efforts.
McNealy concluded, To help ensure the long-term health of the business, we are resizing some areas of the company where we have over-capacity, including facilities, while still protecting our field sales and service coverage, ensuring customer satisfaction, and protecting R&D to solidify our future as a provider of great products. We exited the quarter with a strong balance sheet and have approximately $6 billion in cash. We are well-positioned to emerge from the current environment with momentum and strength.
SOURCE: COMPANY PRESS RELEASE
