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Sun Microsystems narrows loss significantly

Sun Microsystems narrows loss significantly

Sun Microsystems narrows its Q1 loss to $56 million, with $3.189 billion revenue in financial results released Thursday

Stronger sales of its Solaris 10 operating system helped Sun Microsystems cut its losses significantly in quarterly financial results, beating analysts estimates.

Sun posted a net loss of $US56 million or $US0.02 a share, on a 17 per cent increase in revenue to $US3.19 billion in its fiscal 2007 first quarter, which ended Oct. 1. Analysts forecast a net loss of $US0.04 a share on revenue of $3.2 billion.

In the same quarter last year, Sun posted a net loss of $US123 million or $US0.04 cents.

Sun reported operating profit of 43.5 per cent of revenue, which is at the high end of its forecast in the range of 42 per cent to 44 per cent, chief financial officer of Sun, Mike Lehman, said.

Lehman forecast percentage revenue growth in the company's current quarter in the high single digits with the gross profit again in the 42 per cent to 44 per cent range.

Factors that turned the operating profit into a net loss were: $US21 million of restructuring and related impairment of asset charges and a $US7 million benefit for related tax effects; $US58 million of stock-based compensation charges; and $US79 million of intangible asset amortization relating to recent acquisitions. The net impact of these four items was a loss of about $US0.04 per share, the company said.

Adoption of Sun's Solaris 10 operating system topped 6 million licenses in the first quarter, CEO, Jonathan Schwartz, said, adding that 70 per cent of them were running on competing hardware from Dell, HP and IBM.

Schwartz also noted the introduction in the first quarter of new server and storage products, including new storage hardware developed through its acquisition last year of StorageTek.

Sun is appealing to customers "who view IT as a competitive weapon ... rather than a cost center that needs to be cut", he said.

IStronger sales of its Solaris 10 operating system helped Sun Microsystems cut its losses significantly in quarterly financial results, beating analysts estimates.

Sun posted a net loss of $US56 million or $0.02 a share, on a 17 per cent increase in revenue to $3.189 billion in its fiscal 2007 first quarter, which ended Oct. 1. Analysts forecast a net loss of $0.04 a share on revenue of $3.2 billion.

In the same quarter last year, Sun posted a net loss of $123 million or $0.04 cents.

Sun reported operating profit of 43.5 per cent of revenue, which is at the high end of its forecast in the range of 42 per cent to 44 per cent, noted chief financial officer of Sun, Mike Lehman, during a conference call with financial analysts. Lehman forecast percentage revenue growth in the company's current quarter "in the high single digits" with the gross profit again in the 42 per cent to 44 per cent range.

Factors that turned the operating profit into a net loss were: $21 million of restructuring and related impairment of asset charges and a $7 million benefit for related tax effects; $58 million of stock-based compensation charges; and $79 million of intangible asset amortization relating to recent acquisitions. The net impact of these four items was a loss of approximately $0.04 per share, the company said.

Adoption of Sun's Solaris 10 operating system topped 6 million licenses in the first quarter, CEO, Jonathan Schwartz, said, adding that 70 percent of them are running on competing hardware from Dell, HP and IBM.

Schwartz also noted the introduction in the first quarter of new server and storage products, including new storage hardware developed through its acquisition last year of StorageTek.

Sun is appealing to customers "who view IT as a competitive weapon ... rather than a cost center that needs to be cut," he said.

Sun also cited an increase in its services business for the revenue growth and said Computer Systems Products revenue increased 15 per cent compared to the year ago quarter, the third consecutive quarter of year-over-year revenue increase.

Schwartz was asked to comment on the announcement Wednesday by database software giant Oracle of its plans to sell support packages for Red Hat Linux. Oracle said its Unbreakable Linux service would strip out all the trademarked features of Red Hat.

Schwartz said the news reinforces Sun's decision to push its own Solaris OS. "It feels great to have an OS that allows us to have control of our own future."

It also cited an increase in its services business for the revenue growth and said Computer Systems Products revenue increased 15 per cent compared to the year ago quarter, the third consecutive quarter of year-over-year revenue increase.

Schwartz was asked to comment on the announcement by database software giant Oracle of its plans to sell support packages for Red Hat Linux. Oracle said its Unbreakable Linux service would strip out all the trademarked features of Red Hat.

Schwartz said the news reinforced Sun's decision to push its own Solaris OS.

"It feels great to have an OS that allows us to have control of our own future," he said.


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