Sun Anticipates Missing Wall Street's Expectations

By The Wall Street Journal

Sun Microsystems Inc. on Tuesday projected a wider fiscal-fourth-quarter loss and lower revenue than Wall Street had been expecting, in what may be its last quarterly report as an independent company.

But Oracle Corp., which is close to completing a $7.38 billion deal to buy Sun, continues to predict the acquisition will boost its profits.

Sun's results would continue a series of losses that helped push the computer maker into the arms of software giant Oracle, which edged out International Business Machines Corp. to buy Sun.

Once one of Silicon Valley's most influential companies, Sun reacted later than competitors to a shift to low-price server systems. More recently, the company suffered more than competitors because many customers were concentrated in the hard-hit financial-services sector.

Sun projected a loss for the period ended June 30, excluding items, of six cents a share to 16 cents a share on revenue of $2.58 billion to $2.68 billion. Analysts polled by Thomson Reuters, on average, had forecast a one-cent loss on revenue of $3.03 billion.

Oracle reiterated an estimate made in April that it expects the Sun acquisition to add at least 15 cents a share to its earnings, excluding items, in the first year after the deal closes. It estimated that the business will contribute more than $1.5 billion to operating profit, increasing to more than $2 billion in the second year.

The deal, expected to close this summer, requires regulatory and shareholder approval. Oracle said last month that the U.S. Department of Justice had made a second request for information as part of its antitrust review of the proposed transaction, focusing on plans to license Sun's widely used Java software technology. Sun shareholders are set to vote on the deal Thursday.