The Wall Street Journal-20080125-Sun Net Jumps Despite Slim Revenue Rise
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Sun Net Jumps Despite Slim Revenue Rise
Sun Microsystems Inc. posted scant revenue growth but strong net profit for its fiscal second quarter, and the computer maker forecast stronger-than-expected growth rates for its second half.
While the Santa Clara, Calif., company's profit nearly doubled from a year earlier for the period ended Dec. 30, its revenue increased just 1.4%. Revenue from Sun's server computers and storage products, which make up the majority of the company's sales, declined 0.5%. Revenue from services increased 5%.
Still, Sun projected stronger-than-expected sales growth for its second half. Chief Financial Officer Michael Lehman said the company expects revenue for the 2008 fiscal year to increase by low- to mid- single digits, with sales for the second half increasing at least 5%. That is above Wall Street projections of second-half sales growth of about 2.5%.
Sun preannounced its expected earnings and revenue earlier this month when it said it was acquiring Swedish software company MySQL AB for $1 billion. Since disclosing the deal, Sun's stock has largely risen. Its shares rose $1.30, or 8.8%, to $16.12 at 4 p.m. in Nasdaq Stock Market composite trading, before the formal announcement.
Sun, which slumped during the tech bust earlier this decade, has in recent quarters returned to profitability. Jonathan Schwartz, chief executive since 2006, has trimmed the company's head count and introduced products and partnerships, such as one with Dell Inc. to offer Sun's Solaris operating system on Dell servers to Dell customers.
In a conference call, Mr. Schwartz said, "Growth absolutely remains our No. 1 priority, and based on our strong product lineup and out intent to acquire MySQL. . . I couldn't be more positive about our prospects and momentum." Sun added that it is unsure whether the MySQL acquisition will close in its fiscal third or fourth quarter but added that it expects a charge of $30 million to $50 million when the deal is completed.
Profit for the latest quarter was affected by a $32 million restructuring charge; the earlier period included a $26 million restructuring charge. Analysts had expected earnings of 30 cents a share and revenue of $3.59 billion, according to Thomson Financial.
