Goldman cuts Sun earnings forecast

NEW YORK: Goldman Sachs said on Wednesday that it had cut its earnings

forecast for Sun Microsystems Inc. to 40 cents a share from 50 cents for the

2002 fiscal year after the network computer maker reduced its current-quarter

profit and revenue forecast.

Blaming economic weakness in Europe, Sun said per-share earnings on a pro

forma operating basis for the quarter would be 2 to 4 cents, below Wall Street's

forecast of 6 cents, while sales would be 10 per cent or more below Wall Street

estimates.

In her report, analyst Laura Conigliaro wrote, "We expect it will now

take more dramatic and/or uncharacteristic measures to shake up the company and

move away from some of its sacred cows." Those measures could include

layoffs as well as the elimination of less critical research and development

projects and acquisitions, she said.

Shares of Sun closed Tuesday on Nasdaq at $18.67, though it fell further in

after-hours trading on Instinet.

(C) Reuters Limited 2001.