Ahead of the Bell: Analysts cut Sun Microsystems targets

NEW YORK—Analysts slashed estimates and price targets on Sun Microsystems Inc. Friday, the day after the server and software maker's fiscal third-quarter loss and flat fiscal fourth-quarter revenue guidance shocked investors.

The Santa Clara, Calif., company said it lost $34 million, or 4 cents per share, in the period. Analysts polled by Thomson Financial expected, on average, earnings of 18 cents per share.

Revenue of $3.27 billion also missed analysts' $3.38 billion forecast.

Lehman Brothers analyst Ben Reitzes cut his target to $14 from $17, implying he expects the stock to fall 14 percent over Thursday's $16.33 close.

"We believe investors will view this earnings report very negatively due to both the size of the revenue miss and shortfall in margins," Reitzes said in a note to clients. He kept an "Equal weight" rating on shares.

For the fiscal fourth quarter, Reitzes now expects earnings of 27 cents per share, compared with a prior 38 cents per share estimate. Analysts expected earnings of 39 cents per share.

Thomas Weisel Partners analyst Doug Reid lowered his target to $16 from $19 and kept a "Market weight" rating.

"We believe that Sun Microsystems will struggle to achieve year-over-year growth in fiscal 2009 given a clear pullback in high end information technology investments," Reid said in a note to clients.

For fiscal 2009, Reid cut his earnings estimate to $1.10 per share from $1.34 per share. Analysts expect profit of $1.36 per share for the year.