In light of a surprising third-quarter loss, analysts sound cautionary notes and CEO Schwartz announces plans to lay off up to 2,500 employeesA day after posting its worst financial results in more than a year, Sun Microsystems (JAVA) announced May 2 that rock musician Neil Young would join its executives on stage in San Francisco to promote a new music project that uses Sun's Java programming language. Young's appearance at Sun's annual JavaOne conference May 6 may grab headlines, but it surely won't help the worsening business fortunes hammering Sun's already battered shares.
Just when it looked like the embattled computer maker was emerging from a multiyear spiral, an unexpected third-quarter loss reported on May 1 sent Sun's shares even lower. The stock, temporarily buoyed by a one-for-four reverse stock split in November, 2007, fell sharply—tumbling $3.69, or nearly 23%, to close at 12.64 on May 2. The results suggested a turnaround begun under CEO Jonathan Schwartz may be losing steam and fueled concern the economic slump is taking a bigger toll on Sun than on peers.
In the quarter that ended Mar. 30, Sun suffered a loss of $34 million, or 4¢ a share. Wall Street was looking for a profit of 18¢. The fiscal third-quarter results ended a five-quarter profit streak for Sun. During a conference call with investors, Schwartz said Sun's U.S. business customers postponed buying decisions in March amid uncertainty over U.S. economic growth. Schwartz, who succeeded co-founder Scott McNealy as CEO in 2006, also said he'd cut as many as 2,500 jobs.
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