After Year in Red, Sun Posts Profit

After four consecutive quarterly losses, Sun posts profits, but ends fiscal year with a net loss.

Workstation and server maker Sun Microsystems Inc. posted a modest profit today after four consecutive quarterly losses, but ended its fiscal year with a net loss of $628 million.

For its fourth quarter, Sun posted a profit of $20 million on sales of $3.4 billion, for a profit of a penny per share, which was in line with consensus Wall Street expectations, according to Thomson Financial/First Call.

"We stated a goal of reporting a profit this quarter and we achieved that goal," said Sun Chairman and Chief Executive Scott McNealy, in a statement issued with the earnings. "Im immensely proud of my team. They have integrity. They have talent. They have tenacity. And, they achieved this goal while protecting investments in research and development, aggressively managing cash balances, and gaining market share from competitors."

Revenues for the were up 10 percent from the previous quarter, but still well below the $4 billion it recorded a year ago.

For its full 2002 fiscal year, Sun posted a loss of 19 cents per share, or $628 million, which includes a $517 million restructuring charge, a $99 million loss on equity investments.

Sun, based in Santa Clara., Calif., was among the companys hardest hit by the collapse of Internet-based businesses in 2000 and 2001, eliminating a substantial portion of customers that had purchased Suns Unix-based servers due to their ability to handle thousands of simultaneous transactions that e-commerce sites had to be able to handle.

In the past year, the company has refocused its efforts on marketing to traditional brick-and-mortar companies, such as financial and scientific institutions, as well as refreshing its product line to more effectively compete against rivals Hewlett-Packard Co. and IBM.

McNealy said the companys return to profitability shows those efforts are paying off.

"We achieved gains in low-end server sales through the continued success of our UltraSPARC III processor-based products such as the Sun Fire V880 2-way, 4-way, and 8-way servers and the Sun Fire 280R, rack-mountable 2-way server," he said. "We also increased sales of our high-end UltraSPARC III processor-based products such as the Sun Fire 6800 and Sun Fire 15K mainframe replacement servers. These gains were augmented by strong market acceptance of our newest products such as the Sun Fire V480 4-way server in the low-end space and the Sun Fire 12K server in the high-end space."

Underscoring the companys recent successes, Sun this week announced that the Cambridge-Cranfield High Performance Computing Facility in Glasgow, Scotland, has purchased 10 Sun Fire 15K servers, Suns largest server, in a deal valued at more than $40 million.

Suns 15K server is the companys most powerful computing system, capable of handling up to 106 64-processors and 576GB of memory in a single cabinet.

In addition to that successful sales overseas, Sun said the company is also regaining its footing in the U.S. market, as well.

"We were particularly pleased with our strong performance in the U.S. geography, which reported 20% revenue growth over the prior quarter," said Steve McGowan, Suns chief financial officer, in a statement issued today.