The Californian company made a net loss of $760m (�424m) in the three months to March, compared with a $4m profit the same time last year.

Sun's revenue fell for the 12th quarter in succession, falling to $2.65bn from $2.79bn.

When it gave its profit warning earlier this month Sun also announced it would be cutting 3,000 jobs to save costs.

Settlement

At the same time it also gave more details of the settlement of its long-running legal battle with Microsoft.

Under the peace deal, Microsoft will pay Sun $1.6bn to resolve their patent and competition disputes.

Sun chief Scott McNealy has made peace with Microsoft

Sun had accused Microsoft of changing its popular Java programming software without its permission.

Under the Microsoft deal Sun will receive $700m to resolve pending antitrust issues and $900m to end patent disputes.

As previously announced, the 3,000 job cuts at Sun - 10% of its workforce - will be combined with selling off some of its global property portfolio as part of its restructuring.

The downturn in the technology sector following the bursting of the dotcom bubble has hit Sun Microsystems hard over the past few years.

The company had aimed to return to profitability by the end of June 2002 but it is still making a loss two years later.