UPDATE 2-Sun Micro loss deepens prior to acquisition

* Q3 loss 21 cents/share vs Street estimate 19 cents loss

* Q3 revenue $2.61 bln, misses $2.85 bln Street estimate

* Sun shares little changed in extended trade
(Adds analyst comment, details on results, byline)

By Jim Finkle

BOSTON, April 28 (Reuters) - Computer server maker Sun
Microsystems Inc (JAVA.O) reported a wider quarterly loss as
sales fell because of lower technology spending and uncertainty
over the company's future.

Analysts said Sun's business was hurt in the last few weeks
of the quarter by news that it was in talks to be acquired by
IBM (IBM.N), prompting some customers to hold off on making
purchases until they knew the outcome.

Oracle Corp (ORCL.O) later swooped in and agreed to buy Sun
for more than $7 billion, a deal that was announced April 2.

Revenue fell 20 percent to $2.61 billion in Sun's fiscal
third quarter ended March 29, compared with the average analyst
forecast of $2.85 billion, according to Reuters Estimates.

Businesses were hesitant to buy Sun's computers out of
concern that it might not be around to service that equipment if
the unprofitable company failed to sell itself, analysts said.

"There was probably some pressure from the IBM saga that
impacted the top line," said Cross Research analyst Shannon
Cross. "It would have made it hard to close the quarter."

Excluding restructuring charges and related impairment of
long-lived assets, Sun lost 21 cents per share in the quarter,
compared with the loss of 19 cents a share expected by analysts,
according to Reuters Estimates.

Computer sales dropped 29 percent to $1 billion, while
storage equipment sales fell 20 percent to $425 million.
Software sales rose 27 percent to $187 million, while services
revenue fell 13 percent to $1.1 billion.

Gross margin shrank 2.2 percentage points from a year
earlier to 42.7 percent.

Sun reported a net loss of $201 million, or 27 cents per
share, versus a year-earlier loss of $34 million, or 4 cents.

The shares of the Santa Clara, California-based company were
quoted at $9.14 in extended trade, down slightly from their
Nasdaq close of $9.16.

Shares of Redwood City, California-based Oracle were quoted
at $19.66 in extended trade, down from their Nasdaq close of
$19.74.

Oracle spokeswoman Deborah Hellinger declined comment on
Sun's results. The company is not holding a conference call with
analysts.
(Reporting by Jim Finkle; Editing by Steve Orlofsky and Matthew
Lewis)