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By Suzanna Kerridge, 19 July 2002 15:50

NEWS Sun Microsystems has posted its first annual loss since it started public trading in 1986, but things could be worse: the company did manage to record a profit in its latest quarter. The company made revenues of $12.5bn for the year - down 32 per cent on 2001 - and put in a net loss of $628m. But it did have a healthy fourth quarter, recording a profit of $20m on revenues of $3.4bn. That compares with a loss of $88m for the same period last year. However, its outlook for the coming year remains downbeat. CFO Steve McGowan told analysts during a conference call that sales growth will be lower than expected at around 10 to 15 per cent instead of the 17 per cent predicted earlier. However, he remained positive about progress made during the past financial quarter. Sales of the Sun Fire 12K - a rival to IBM's Regatta - made a strong start, he said, with more than 100 units ordered over the past quarter. The company's high end servers, Enterprise 6800 and the Sun Fire 15K, also continued to sell well. McGowan said the company's drive to reduce costs proved successful despite a $65m increase of company debt. "You will see that operating expenses were down $42m sequentially," he said. Investment in R&D stood at $1.8bn but spending cuts were made in advertising, marketing and the closure of certain offices to encourage employees to work from home. Ten per cent of its workforce - or 4,200 staff - were made redundant last year, with another 1,000 scheduled to be axed by Christmas.