Sun Micro sales fall, Oracle deal delay stings

• On 5:51 pm EST, Friday November 6, 2009

NEW YORK (Reuters) - Computer maker Sun Microsystems Inc (NasdaqGS:JAVA - News) suffered a 25 percent fall in quarterly revenue, as uncertainty over its delayed sale to Oracle Corp (NasdaqGS:ORCL - News) hurt its business.

Lower operating expenses helped Sun Microsystems curb its fiscal first quarter loss to $120 million, or 16 cents a share compared with $1.68 billion, or $2.24 a share, a year earlier, according to a filing with the U.S. Securities and Exchange Commission.

But revenue fell to $2.24 billion from $2.99 billion in the same quarter a year earlier, and was lower than the average analyst estimate of $2.34 billion, according to Thomson Reuters I/B/E/S.

The 25 percent drop was also steeper than the sales slump at other technology companies. Oracle's total revenue last quarter fell 5 percent from a year earlier, while chipmaker Intel Corp's (NasdaqGS:INTC - News) revenue fell 7.8 percent.

"Our first quarter of fiscal year 2010 results continued to be affected by the economic downturn, the uncertainty associated with our proposed acquisition by Oracle, increased competition and delays in customer purchasing decisions," Sun said in a statement on Friday.

Oracle Chief Executive Larry Ellison recently said that Sun is losing about $100 million a month because of uncertainty about its future, as European antitrust regulators pursue an in-depth probe of the deal.

Sun sold itself to Oracle after several years of failed attempts to devise a strategy to turn itself around. A sale to Oracle was seen as a way to transform Sun into a diversified technology company selling computers alongside Oracle's software.

But European Union regulators said last month that Oracle has not presented evidence to placate anti-competition concerns. The European Commission faces a January 19 deadline on whether to approve the deal.

Rivals IBM (NYSE:IBM - News) and Hewlett-Packard Co (NYSE:HPQ - News), in the meantime, are taking advantage of the uncertainty by luring Sun's customers with steep discounts.

Sun Microsystems has said recently it is cutting 3,000, or around 10 percent, of its jobs worldwide. The cuts were in addition to its plans last year to cut 5,000 to 6,000 jobs.

(Reporting by Ritsuko Ando; editing by Carol Bishopric)

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