Sun sets on $1billion loss

By Steve Malone

Posted on 30 Sep 2003 at 09:49

Sun Microsystems has announced that it is to take a $1 billion hit on its fourth quarter 2003 earnings. This is due to a $1,051 million tax charge that, the company estimates, will plunge the system builder deep into the red this quarter.

According to US law a company can defer taxes whilst it is making losses to some time in the future when (hopefully) it is back in the black. However, Sun continues to make losses and can no longer keep the credits on the positive side to defer against future income.

Sun's share price has fallen 10.88 per cent in after hours trading following the news.

The company, which specialises in high performance computers for the Internet and telecoms sectors has had a hard time of it in the past few years as the dot com boom collapsed. Despite layoff and big losses, the company has yet to see a turnaround in its fortunes. Its problems have lain in a weak market and ferocious price cutting from its bigger rivals IBM and Hewlett Packard, both of whom are also suffering badly in this sector of the market. However, their pockets are much deeper.