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Sun Micro Posts Profit Amid Strong Server Sales

CNBC.com
Monday, 5 Nov 2007 | 4:57 PM ET

Sun Microsystems reported a quarterly profit on Monday compared with a year-earlier loss amid strong sales of its high-end computers.

Sun Microsystems's headquarters in Santa Clara, California.
Paul Sakuma
Sun Microsystems's headquarters in Santa Clara, California.

Net income in the company's fiscal first quarter was $89 million, or 3 cents per share, compared with a net loss of $56 million, or 2 cents per share, in the year-earlier period.

Revenue advanced to $3.22 billion from $3.19 billion.

In after-hours trading, shares of Sun were trading down more than 3 percent after closing Monday at $5.71.

Net income included $113 million, or 3 cents per share, of restructuring charges. Analysts, on average, had expected revenue of $3.26 billion, according to Reuters Estimates.

Shares of Sun Micro, up 3.3 percent this year through Friday, fell 2.3 percent in extended trading after closing up 2 percent at $5.71 on Nasdaq.

Sun Micro, based in Santa Clara, Calif., said its gross profit margin increased 5 percentage points to 48.5 percent from the year-earlier period.

Sun, led by Chief Executive Jonathan Schwartz, has been staging a recovery by changing its product line, selling server computers powered by chips from Advanced Micro Devices and Intel, among other moves. It has also cut about 4,000 jobs in the past year.

The company benefited from strength in its high-end systems lineup, Schwartz said in a statement, as well as growth in subscription-based identity management software and greater adoption of its Solaris 10 operating system.

Sun competes in the market for server computers and data-storage gear with bigger rivals International Business Machines and Hewlett-Packard. The company had 13 percent of the worldwide server market in the three months ended June 30, while IBM claimed 31 percent and HP 28.2 percent, according to market researcher IDC.

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