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Sun reports strong profits but little growth

Sun reports strong profits but little growth

Sun's profit nearly doubled in its fiscal second quarter despite virtually flat revenue

Sun Microsystems doubled its profit in the quarter ended Dec. 30, although revenue was nearly flat compared with the same period a year earlier, the company announced Thursday.

Net income for the quarter, the second of Sun's fiscal year, was $US260 million, or $0.31 per share, up from $133 million and $0.15 per share in the same quarter of fiscal 2006, the company announced Thursday.

Revenue was $3.62 billion, up just 1.4 per cent from the same quarter a year earlier. The growth came from Sun's services business, where revenue climbed 5 per cent. Sales of servers and storage products, which account for about two-thirds of Sun's business, declined by 0.5 per cent.

Business was particularly slow in the U.S., where revenue declined 8 per cent year over year. The Europe, Middle East and Africa (EMEA) region performed better, with growth of 7 per cent. EMEA accounted for 39 per cent of revenue in the quarter, overtaking the U.S., which is usually Sun's biggest source of revenue.

Despite the quarter's slow growth, Sun said its full-year growth would be better. On a conference call, Chief Financial Officer Mike Lehman said revenue for fiscal 2008 would increase in the "low-to-mid single digits" and predicted revenue growth in the second half of greater than 5 per cent.

Sun's profit benefited from its ongoing cost-cutting plan, which has included several hundred layoffs so far. Its $260 million profit included a restructuring charge of $32 million.

Sun announced a surprise plan last week to buy MySQL, the biggest open-source database vendor, for $1 billion. Sun officials said Thursday they are unsure whether the MySQL acquisition will close in the second or third quarter, and have not yet calculated the long-term impact on Sun's financials. They expect to take a one-time charge of $30 million to $50 million when the deal closes.


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