SAN FRANCISCO (AP) — Profit at Sun Microsystems, the computer server maker, declined 73 percent in the most recent quarter as slumping sales to big American companies and reorganization charges weighed on the server and software maker.
Willie Walsh, the chief executive of British Airways.
The company, based in Santa Clara, Calif., also revealed plans Friday to expand its stock buyback program by $1 billion, a sign that Sun believes its shares, which have fallen by 50 percent over the last nine months, are undervalued and poised to rebound.
Wall Street did not share that optimism.
Sun’s shares sank 12.3 percent, to $9.32, on the company’s worse-than-expected guidance, which indicated that the pressures that hurt Sun in the April-June period, its fourth quarter, are affecting the current quarter.
Sun said before the market opened that it expected a “slight” sales decline in its first quarter, which ends in September, and indicated it most likely would not turn a profit. Analysts surveyed by Thomson Financial were expecting flat sales and a profit of 11 cents a share in this quarter.
The Goldman Sachs analysts David Bailey and Min Park said in a note to clients that Sun’s results supply “another piece of evidence that the problems the company faces have no short-term fixes, and we would continue to avoid the shares.”
Sun blamed weakness in the American economy, which has caused some of its biggest customers to cut spending, and the sale of fewer higher-end servers, which carry better profit margins. Sun faces intense competition in that market from I.B.M. and Hewlett-Packard.
Sun earned $88 million, or 11 cents a share, in the quarter, compared with $329 million, or 36 cents a share, in the period a year ago.
Excluding one-time charges, Sun earned 35 cents a share.
Sales were $3.78 billion, down from $3.84 billion last year.
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