Network computer maker Sun Microsystems Inc. stands to lose money this quarter as Japanese and European sales fail expectations, reflecting a weak economy, the company's chief financial officer said on Wednesday. 

CFO Mike Lehman told a mid-first quarter conference call that U.S. demand was close to target but total revenue was not on track to meet the $3.7 billion operating break-even level as Sun expected on July 19, when it reported its fourth quarter. 

``It will take a very large month of September in terms of demand for us to hit the break-even point. At this stage I would not count on that happening,'' he said. ``I'm just saying it will be a real stretch.'' 

Weakness was concentrated in Japan and Europe, with demand in the United States only ``a touch behind'' forecasts, although Palo Alto, California-based Sun had seen U.S. sales falling in the September-ending first quarter from the fourth, he said. 

Merrill Lynch analyst Thomas Kraemer did not point a finger at management. ``I think the vast majority of this is the economy,'' he said. 

``The thing that everybody wants is certainty and visibility, and Sun went out of its way to not give that. Because it is not out there to be had.'' 

Sun is a technology powerhouse but its legendary growth has stagnated with the economy and the evaporation of dot-com clients who relied on Sun servers to build out the Internet. 

Debra McNeill, a portfolio manager at Fremont Investment Advisors, also blamed the economy for Sun's woes but sounded a note of caution. ``Sounds like there is a general consensus, which probably means we are all wrong,'' she said. 

The new outlook by Sun, which revised estimates the two previous quarters, was below Wall Street expectations compiled by Thomson Financial/First Call of first-quarter revenue of $3.8 billion. On average Wall Street had expected 2 cents earnings per share, with forecasts ranging from a loss of 2 cents to a profit of 4 cents. 

In any case results will miss the 15 cents earnings per share on sales of $5 billion in the year-ago first quarter. 

Shares of Sun fell in after-hours trade to as low as $12.50 and were last quoted at $12.76 on the Instinet system, off a close of $13.43 on Nasdaq, where they had lost 13 cents for the day. 

Sun shares have fallen by half this year, underperforming the American Stock Exchange Technology Hardware index by more than 30 percent. 

U.S. SIGN OF HOPE 

Analysts and investors saw a silver lining in some U.S. stability, which Sun also mentioned in July. 

Lehman also said he expected a noticeable improvement in second-quarter revenue but declined to give precise forecasts for either quarter. He did say Sun also expected to cut the work force by 500 people in the quarter. 

``Our premise is that an upturn will start in the U.S. so we would view the stability in the U.S. cited by Sun (and Cisco Systems last week) as positive leading indicators -- the weakness in Europe/Asia is -- in our view -- a lagging indicator,'' Bear Stearns analyst Andrew Neff wrote by email. 

Lehman, pushed by analysts, said a number of times that Sun was not losing deals consistently to competitors, a constant question, especially as International Business Machines Corp. prepares to introduce a new microchip. 

Portfolio manager Thomas Rath, who manages a $200 million SAFECO Corp. fund, said that Sun's dominance of the Unix operating system market assured it of a future thanks to a huge installed base, even in the face of a strong IBM threat. 

Sun also is getting ready to launch a new high-end server and is ramping up a deal to sell storage built by Hitachi Data Systems that is generally seen helping Sun. 

Rath said that investors had to buy cyclical companies like Sun when times were bad -- assuming an economic recovery which would invigorate the firm was not too far away. 

``You kind of plug your nose and buy,'' he said, calling Sun a long-term winner at a cheap price. ``If you expect a recovery in the next 9 months, say, I think this is the right place to start to nibble.''