Sun Reports Preliminary Third Quarter Results, Restructuring

Posted by Bill Bradford on Apr 2, 2004

Sun reported today that it will be taking actions to further reduce its cost structure by reducing headcount and restructuring its global property portfolio. Additionally, the company announced it will be incurring a non-cash charge to increase the valuation allowance for its net deferred tax assets.

Sun also announced that based on preliminary financial results, it expects revenue for its third quarter ended March 28, 2004 to be approximately $2.65 billion. Net loss on a GAAP basis will be in the range of $750 million and $810 million, or a net loss per share range of $0.23 to $0.25. This GAAP loss includes charges of approximately $350 million for an increase in the valuation allowance for deferred tax assets, and approximately $200 million for workforce and real estate restructuring. Excluding these charges, on a non-GAAP basis, net loss for the quarter would range between $200 million and $260 million, or a net loss per share range of $0.06 to $0.08.
Positive cash flow from operations for the quarter is expected to exceed $300 million, and the balance of cash and marketable debt securities is estimated to increase to approximately $5.5 billion.

As part of the restructuring program, Sun’s workforce will be reduced by approximately 3,300 people. As a result of both the headcount and property portfolio capacity reductions, the Company expects to record a total charge of approximately $475 million spread over the next several quarters, inclusive of the approximate $200 million charge in the third quarter preliminary results.

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