Welcome!

Java IoT Authors: Elizabeth White, Liz McMillan, Yeshim Deniz, Zakia Bouachraoui, Pat Romanski

Related Topics: Java IoT

Java IoT: Article

Sun's Quarter Sucked; Layoffs Planned

Sun's Back In the Red Again After Five Profitable Quarters and Five Years In the Red Following the dot.com Bust

Sun’s back in the red again after five profitable quarters and five years in the red following the dot.com bust.

The March quarter turned sour on it, starting, it said, with the first week in March when the channel stared reporting a drop in sales, a miasma that spread to its end-user business as the month progressed.

It blamed the US economy, where business was down 10%, some of it traceable to smaller businesses and the government, it said. (Former Sun CEO Scott McNealy runs Sun Federal.)

It gets 40% of its revenues from the US and the gains it made in 12 out of 16 geographies weren’t enough to make up for the “significant” shortfall.

The problem, however, may be more Sun-specific than the company allows considering that sales have been dropping for quarters now.

It thinks this quarter may not be as bad, maybe flat with last year, but “solidly profitability,” however, things are bad enough that it’s going to restructure again – and can somewhere between 1,500 and 2,500 people to lower its operating expenses by $100 million-$150 million a year.

It’s also abandoning its dearly held promise of seeing a 10% operating margin next fiscal year, which starts in June. Now it’s looking at 7%-8%, and it’s going to cut R&D.

Sun’s losses surprised Wall Street. It was thinking the company would clear 18 cents on revenues of $3.38 billion. Instead it showed up negative four cents, or $34 million, on revenues of $3.27 billion, down 0.5%. Its stock sunk over 14.5% in after-hours trading.

It earned seven cents or $67 million a year ago.

MySQL, its billion-dollar open source acquisition, cost it four cents in the quarter, an impact Sun expects will repeat this quarter. Without MySQL it would have at least broken even, but it’s delighted with its purchase and the market’s response to it. Integration advances apace, it said.

On the sales side what it described as high-end systems were off $100 million. Ditto high-end storage, tape and libraries.

CFO Michael Lehman said Sun didn’t lose the business to competitors and deals were still active he just didn’t think that a lot of would close this quarter. In fact, he suggested, a lot may simply vanish.

Sun also paid more taxes than last year: $52 million versus a $3 million tax benefit.

Its gross margin was 44.9%, up four-tenths of a point.

It claimed double-digit growth in India and Brazil, and triple-digit billings growth in its Niagara systems. It was also happy with its blades business.

Sun expects to take a $130 million-$220 million charge this quarter to cover the layoffs, which Lehman described as a “reduction in force” that would hit inside and outside the states.

Sun’s payroll is up 1,100 people including 600 from its acquisition of MySQL and the free desktop virtualization house, innotek, and 300 added in emerging markets.

More Stories By Maureen O'Gara

Maureen O'Gara the most read technology reporter for the past 20 years, is the Cloud Computing and Virtualization News Desk editor of SYS-CON Media. She is the publisher of famous "Billygrams" and the editor-in-chief of "Client/Server News" for more than a decade. One of the most respected technology reporters in the business, Maureen can be reached by email at maureen(at)sys-con.com or paperboy(at)g2news.com, and by phone at 516 759-7025. Twitter: @MaureenOGara

Comments (0)

Share your thoughts on this story.

Add your comment
You must be signed in to add a comment. Sign-in | Register

In accordance with our Comment Policy, we encourage comments that are on topic, relevant and to-the-point. We will remove comments that include profanity, personal attacks, racial slurs, threats of violence, or other inappropriate material that violates our Terms and Conditions, and will block users who make repeated violations. We ask all readers to expect diversity of opinion and to treat one another with dignity and respect.


IoT & Smart Cities Stories
IoT is rapidly becoming mainstream as more and more investments are made into the platforms and technology. As this movement continues to expand and gain momentum it creates a massive wall of noise that can be difficult to sift through. Unfortunately, this inevitably makes IoT less approachable for people to get started with and can hamper efforts to integrate this key technology into your own portfolio. There are so many connected products already in place today with many hundreds more on the h...
SYS-CON Events announced today that IoT Global Network has been named “Media Sponsor” of SYS-CON's @ThingsExpo, which will take place on June 6–8, 2017, at the Javits Center in New York City, NY. The IoT Global Network is a platform where you can connect with industry experts and network across the IoT community to build the successful IoT business of the future.
CloudEXPO New York 2018, colocated with DXWorldEXPO New York 2018 will be held November 11-13, 2018, in New York City and will bring together Cloud Computing, FinTech and Blockchain, Digital Transformation, Big Data, Internet of Things, DevOps, AI, Machine Learning and WebRTC to one location.
Andrew Keys is Co-Founder of ConsenSys Enterprise. He comes to ConsenSys Enterprise with capital markets, technology and entrepreneurial experience. Previously, he worked for UBS investment bank in equities analysis. Later, he was responsible for the creation and distribution of life settlement products to hedge funds and investment banks. After, he co-founded a revenue cycle management company where he learned about Bitcoin and eventually Ethereal. Andrew's role at ConsenSys Enterprise is a mul...
DXWorldEXPO | CloudEXPO are the world's most influential, independent events where Cloud Computing was coined and where technology buyers and vendors meet to experience and discuss the big picture of Digital Transformation and all of the strategies, tactics, and tools they need to realize their goals. Sponsors of DXWorldEXPO | CloudEXPO benefit from unmatched branding, profile building and lead generation opportunities.
Disruption, Innovation, Artificial Intelligence and Machine Learning, Leadership and Management hear these words all day every day... lofty goals but how do we make it real? Add to that, that simply put, people don't like change. But what if we could implement and utilize these enterprise tools in a fast and "Non-Disruptive" way, enabling us to glean insights about our business, identify and reduce exposure, risk and liability, and secure business continuity?
The best way to leverage your Cloud Expo presence as a sponsor and exhibitor is to plan your news announcements around our events. The press covering Cloud Expo and @ThingsExpo will have access to these releases and will amplify your news announcements. More than two dozen Cloud companies either set deals at our shows or have announced their mergers and acquisitions at Cloud Expo. Product announcements during our show provide your company with the most reach through our targeted audiences.
DXWorldEXPO LLC announced today that Telecom Reseller has been named "Media Sponsor" of CloudEXPO | DXWorldEXPO 2018 New York, which will take place on November 11-13, 2018 in New York City, NY. Telecom Reseller reports on Unified Communications, UCaaS, BPaaS for enterprise and SMBs. They report extensively on both customer premises based solutions such as IP-PBX as well as cloud based and hosted platforms.
To Really Work for Enterprises, MultiCloud Adoption Requires Far Better and Inclusive Cloud Monitoring and Cost Management … But How? Overwhelmingly, even as enterprises have adopted cloud computing and are expanding to multi-cloud computing, IT leaders remain concerned about how to monitor, manage and control costs across hybrid and multi-cloud deployments. It’s clear that traditional IT monitoring and management approaches, designed after all for on-premises data centers, are falling short in ...
The deluge of IoT sensor data collected from connected devices and the powerful AI required to make that data actionable are giving rise to a hybrid ecosystem in which cloud, on-prem and edge processes become interweaved. Attendees will learn how emerging composable infrastructure solutions deliver the adaptive architecture needed to manage this new data reality. Machine learning algorithms can better anticipate data storms and automate resources to support surges, including fully scalable GPU-c...