Sun posts strong Q2 figures

But dark clouds of server marker downturn loom

Sun Microsystems' second quarter results showed strong growth. driven by demand from users for servers to build out their Internet infrastructures.

The hardware manufacturer's net income rose to $423 million, from $354 million a year ago. Sun maintained its recent run-rate above $5 billion, recording sales of $5.12 billion or 44 per cent higher than the same quarter a year ago.

Sun expects sales growth of between 30-35 per cent when it reports full year results in June, slightly lower than previous estimates.

The future performance of Sun's business will depend in large part on its ability to bring servers based on its recently introduced UltraSPARC III processors, and demand for appliance server products it gained from its $2 billion acquisition of Cobalt. Sun's main competitors, IBM, Hewlett-Packard and Compaq, have revamped their product lines and it faces far stronger competition in the Unix market.

There are other clouds on Sun's horizon. Analysts at Goldman Sachs and Bank of America Securities recently issued cautious research bulletins about Sun that said it might struggle to meet sales targets in the face of a global economic slowdown in server sales. ®

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