Sun warns of falling revenue and rising losses

Sun is struggling as the economy slows

Sun Microsystems has warned that first-quarter revenue will be lower than expected, and losses greater than anticipated, as a result of the economic slowdown.

The supplier expects to report revenue of between $2.95bn and $3.05bn (£1.73bn and £1.79bn), down from $3.2bn (£1.87bn) for the same period last year. The decline is greater than Wall Street analysts were expecting.

Sun is also predicting losses of 25 to 35 cents per share which does not include a potential write-off of up to $1.8bn (£1.05bn) of goodwill.

The firm has started a review of certain areas of its business - believed to include StorageTek, the storage supplier acquired for $4bn (£2.34bn) three years ago - where its value may be overstated on Sun's balance sheet.

"Sun and its customers are seeing the impact of a slowing economy," said chief executive Jonathan Schwartz.

"We believe we are positioned to offer the kinds of products that can radically help customers reduce expenditures for their infrastructure from open storage to Solaris-based chip multi-threading systems to offering the most eco-efficient systems in the market."

Sun's full first-quarter results will be announced on 30 October.