Sun downsizes revenue results

Solaris concerns and Java lawsuit loom

Sun Microsystems' latest regulatory filing revealed a wealth of information, including a revenue reduction, concerns about open-sourcing Solaris and an update on its court case with Kodak over Java.

Sun has lowered its fiscal fourth quarter income by $12m from the previously reported total of $795m. Most of that gain came courtesy of Sun's settlement with Microsoft. As a result of the change, Sun also lowered its full fiscal year income by $12m and $0.01 per share. The change in revenue was a result of "additional information" Sun received about leased buildings it was looking to sell, the company said in its 10-K filing with the US Securities and Exchange Commission.

Also in the filing, Sun admitted worries about its plan to open source the Solaris operating system.

"The competitive advantage we derive from controlling the development of our Solaris operating system may be reduced if and when we convert it to open source software," Sun said.

Sun spends large amounts of cash developing Solaris and could suffer from open sourcing its sophisticated code. Rival Unix vendors such as IBM and HP and Linux vendors would be able to pick up the Solaris software. Ultimately, however, it will depend on the style of license Sun picks when releasing Solaris to the world.

"Following any such release, there could be an impact on revenue related to our Solaris operating system and we may no longer be able to exercise control over some aspects of the future development of the Solaris operating system," Sun said. "As a result, following any release of the Solaris operating system to the open source community, the feature set and functionality of the Solaris operating system may diverge from those that best serve our strategic objectives, move in directions in which we do not have competitive expertise or fork into multiple, potentially incompatible variations."

Sun also updated the feds on its patent dispute with Kodak, which kicked off yesterday in a New York court with Kodak seeking up to $1bn from Sun. Kodak claims to have developed key technology used by Sun in the creation of Java and is suing over U.S. Patents 5,206,951, 5,421,012 and 5,226,16.

"The parties participated in a court-ordered settlement conference on August 4, 2004, but were unable to reach a settlement," Sun said in the filing. "We believe that we have not infringed any valid and enforceable claim of any Kodak Patent."

Both Sun and Apple are also facing a patent complaint from Gobeli Research over a "method for controlling interrupt processing" in their versions of Unix.

Last and probably least, Sun revealed the exit terms for fired marketing executive Mark Tolliver, who was dismissed when Jonathan Schwartz took on the role of President at Sun. Tolliver is still under contract until Sept. 30, getting his full salary and health benefits. Upon his official dismissal, Tolliver will receive a lum sum payment equal to six and a half months of his salary. Not bad. ®

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