Conference 7.286::digital

2470.0. "Sun - Drop in profit" by GUCCI::HERB (Al is the *first* name) Wed Apr 21 1993 12:12

   MOUNTAIN VIEW, Calif. (AP) -- Sun Microsystems Inc., a leading
maker of computer workstations, on Tuesday reported a slight drop
in quarterly profits, despite record sales. 

   In the three months ended March 28, Sun earned $51.7 million,
or 47 cents per share, compared to $61.4 million, or 60 cents per
share, for the same period a year ago. 

   Revenue for Sun's fiscal third-quarter quarter was a record
$1.14 billion, up 20 percent from $952 million a year ago. 

   The company attributed the drop in profits largely to falling
margins from its SPARCstation. Sun's upgrade for the devices
allows customers to increase performance without buying new
systems. Sun also said sales were weaker in several European
countries. 

   Competition in the workstation market is fierce, and Sun faces
threats from high-performance products offered by Digital
Equipment Corp. and Hewlett-Packard Co. 
 
   In addition, faster computer chips are blurring the lines
between workstations and less expensive personal computer
networks, analysts say. 

   "Sun faces some really tough challenges. Right now, they are
not leading in performance," said Laura Segerval, an analyst with
Dataquest of San Jose, Calif. "At the low-end, it's going to be a
blood bath." 

   Sun said that it continues to move to control spending and
hiring. It now employs 13,381 workers worldwide. 

   Sun released its earnings after the stock market had closed on
Tuesday. Sun closed Tuesday at $28.00, up 37 1/2 cents, in
over-the-counter trading.