Banking

Sun rises above Wall Street goal

Server and software maker says it beat targets, but laid off more workers than expected in the first quarter.

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By Stephen Shankland CNET News.com

Sun Microsystems beat analyst targets for its most recent quarter, but revenue was lighter than expected and the company made more layoffs than it had previously announced.

Including an $82 million charge relating to the settlement of a Kodak patent lawsuit and other charges, Sun had a loss of $174 million, or 5 cents per share, for the fiscal first quarter ended Sept. 26.

Excluding those items, however, the server and software company reported a profit of $13 million, or break-even earnings per share. That compares with an average of a loss of 3 cents expected by analysts polled by Thomson First Call.

"We scorched what the Street had us looking at," Chief Financial Officer Steve McGowan said in an interview on Thursday. Sun's stock closed down 5 cents, or 1 percent, at $3.97 Thursday, but in after-hours trading rose 12 cents, or 3 percent, to $4.09.

Revenue increased 3.6 percent to $2.63 billion, the second consecutive quarter of revenue growth for the company, but was lighter than the $2.71 billion that analysts had expected.

The Palo Alto, Calif.-based company announced a plan in April to lay off 3,300 employees, the third major round of job cuts in a three-year effort to return to profitability. However, the actual number of layoffs was increased to 3,500, McGowan said. So far, 2,900 employees have been dismissed and the remaining 600 have been notified, he added.

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