Advertisment

Sun Micro denies accounting problems

author-image
CIOL Bureau
Updated On
New Update

Peter Henderson

Advertisment

SAN FRANCISCO: Network computer maker Sun Microsystems Inc. denied on Monday

that it faced accounting problems, though analysts questioned the company's

growth prospects.

Palo Alto, Calif.-based Sun said market rumors of problems with its

accounting or the way it books sales were false. The rumors had contributed to a

near 17 per cent decline in Sun's share price over the past four sessions to

Monday.

"Over the last few days, there have been rumors in the market to the

effect that Sun Microsystems, Inc., has experienced 'accounting irregularities'

or 'revenue recognition' problems. These rumors have no basis in fact and are

false," Michael Lehman, Sun's chief financial officer said in a statement.

Advertisment

The denial sparked a partial rebound for the stock in after-hours trade, with

Sun shares rising to $36-1/64 on Instinet from a close of $34.

Sun briefly dipped to $32-5/8 at one point Monday, its lowest level since

December 1999, on a massive volume of 152 million shares, making it the most

active Nasdaq issue.

In the current quarter Sun shares are down 41 per cent, the worst quarterly

performance for the stock in 10 years.

Advertisment

Separately, analysts raised questions about Sun's longer term outlook and

valuation.

Banc of America Securities analyst Kurt King said in a note that he had put

Sun's strong buy rating and $65 price target over 12 months under review but

maintained estimates through next year.

"Sun needs to report significant upside for the December quarter and

guide numbers up for later periods for the story to remain intact. Failing to do

so, this quarter would be viewed as the negative turning point for the

story," he wrote.

Advertisment

King said he expected 49 per cent year-on-year revenue growth to $5.3 billion

in the fiscal 2001 second quarter, ending in December.

Goldman Sachs analyst Laura Conigliaro said that despite Sun's "strong

standing," the brokerage expects short-term upside for the stock to be

limited.

Sun would meet consensus forecasts but was less likely to beat them, at least

through the March quarter, as corporate buyers slow purchases while they try to

get a feel for the macroeconomic environment, she said in a report.

(C) Reuters Limited 2000.

tech-news