Sun Q4: Oracle Really Wants This?

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 |  Includes: JAVA, ORCL
by: Eric Savitz

Hey, Oracle (NYSE:ORCL) CEO Larry Ellison! Are you totally sure you want to buy Sun Microsystems (JAVA)?

Sun Tuesday pre-announced extremely ugly results for its fiscal fourth quarter ended June 30. The company said revenue for the quarter will range from $2.58 billion to $2.68 billion, about flat with the $2.614 billion reported in the March quarter, well below last year’s $3.78 billion, and short of the Street at $3.03 billion. Sun said it sees a non-GAAP EPS loss of 6-16 cents, which is far worse than the penny-a-share loss the Street had expected.

So, why was the quarter so bad? Sun isn’t giving any detail, and there isn’t going to be a conference call, given Sun’s pending acquisition by Oracle. But there are a few obvious possibilities:

  • Sun’s salespeople have been distracted by the deal.
  • Sun’s customers aren’t keen on the company being acquired by Oracle.
  • IT spending isn’t improving as fast the Street had expected.
  • All of the above.

Let’s hope it is some combination of the first two; otherwise, we could be in for a very ugly earnings period in the tech sector.

JAVA shares are not reacting to the news given the pending deal; ORCL is down 27 cents, or 1.3%, to $20.45.

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