Sun Shines With Q4 Profit

Sun Microsystems Inc. (Nasdaq: SUNW) took a step back towards profitability yesterday when it announced its fourth-quarter results, with revenues up to $3.11 billion, an increase of 4.3 percent on the same quarter last year. Net income was $795 million, or 24 cents a share, compared with a net loss of $1.039 billion, or 32 cents for the same period last year.

The hardware firms performance was driven by growth in services and server sales. For the first time, Sun registered over $1 billion in services revenue for the quarter, and server unit sales grew 18 percent sequentially and 46 percent year-over-year.

Sun executives on the company’s earnings call said they will be targeting users of Hewlett-Packard Co. (NYSE: HPQ) kit within the data center, specifically firms using the HP-UX operating system.

And, true to form, Sun CEO Scott McNealy could not resist a swipe at the competition, singling out IBM Corp. (NYSE: IBM) and its recent launch of servers based on its Power5 processors for special criticism (see IBM Pushes Server Partitioning). “The Power5 has a very narrow sweet spot that doesn’t scale up very high and scale down very low,” he said.

McNealy claims that Sun’s long-awaited Solaris 10 operating system, which is set for launch later this year, will run across a range of processors from Advanced Micro Devices (NYSE: AMD) and Intel Corp. (Nasdaq: INTC) as well as Sparc chips.Sun’s fourth-quarter figures include $1.6 billion of other income and $350 million of deferred income related to the company’s settlement with Microsoft Corp. (Nasdaq: MSFT) earlier this year (see Microsoft, Sun Settle Litigation).

Things appear to be looking up for Sun, after grim quarterly results earlier this year and the news that it was shedding 3,300 jobs (see Is Sun Setting?).

Sun execs on yesterday's earnings call said that 2,400 of the employees affected had already been notified, and the remainder will be notified during the next six months.

However, Sun is not completely out of the woods. The hardware firm reported 2004 revenues of $11.185 billion, a decline of 2.2 percent, compared with $11.434 billion for the full 2003 fiscal year.

Net loss for fiscal year 2004 was $376 million, or 11 cents per share. However, this was an improvement on the company’s figures for the 2003 fiscal year -- a net loss of $3.429 billion, or $1.07 per share.In after-hours trading last night, Sun shares fell 3 cents to $4.08.

— James Rogers, Site Editor, Next-Gen Data Center Forum