Feeds

Investors stunned by Sun's apparent health

Q4 pumped full of black ink

Remote control for virtualized desktops

Shares of Sun Microsystems jumped close to 10 per cent in after-hours trading, as the hardware maker posted strong fourth quarter results. Longtime Sun followers, however, may be less moved by the figures since Sun relied more on cost-cutting than sales to improve its bottom line.

Sun posted fourth quarter revenue of $3.84bn - a figure almost even with last year's revenue of $3.83bn in the same period. But Sun's Q4 net income came in at $329m - a vast improvement over a $301m loss one year earlier. The company was obviously aided by a number of cost-cutting moves, including layoffs, and stronger gross margins.

For the full year, Sun reported a 6.2 per cent rise in revenue to $13.87bn and a profit of $473m, which compares to a $864m loss last year.

"This is a great day for Sun," said CEO Jonathan Schwartz, during a call with analysts.

Sun has been working hard to trim costs by reducing its workforce and by improving its own back-end technology. And the company deserves credit for making the most of these moves and beating analyst expectations on the costs front. The company now seems able to post profits with consistency even during so-so quarters, which is what you want in a turnaround story.

Still, Sun has a lot of questions to answer around its core server line. Server revenue has been stagnant to falling over the past few months.

Schwartz attributed some of the server slowness to virtualization technology, which he claims has caused customers to buy fewer boxes. Over the long haul, this trend should benefit Sun with customers buying larger systems to handle lots of applications in one go, he said.

We're not ready to swallow either side of this story and believe that virtualization will have little impact on overall server purchases. Customers always seem to find a way to consume more boxes when given the chance. In addition, Sun has yet to prove it can outflank HP, IBM, and Dell with virtualization, since they have closer historic ties to VMware.

On the plus side for Sun, sales of its x86 servers rose 39 per cent year-on-year. In addition, its Niagara-based systems saw 225 per cent growth, while sales of its X4500 - aka Thumper - storage boxes reached an annual run rate of $100m. Sun's revamped blades hit an annual sales rate of $55m.

Overall, Sun's fourth quarter product revenue came in at $2.49bn, which compares to $2.52bn in last year's Q4. Services revenue hit $1.34bn - up from $1.30bn.

For the full year, Sun's product revenue grew to $8.77bn from $8.37bn. Services revenue reached $5.1bn from $4.7bn.

Sun declined to provide first quarter revenue guidance but said it expects full fiscal 2008 revenue to rise by "the low to mid single digits." ®

Top 5 reasons to deploy VMware with Tegile

More from The Register

next story
NSA SOURCE CODE LEAK: Information slurp tools to appear online
Now you can run your own intelligence agency
Azure TITSUP caused by INFINITE LOOP
Fat fingered geo-block kept Aussies in the dark
Yahoo! blames! MONSTER! email! OUTAGE! on! CUT! CABLE! bungle!
Weekend woe for BT as telco struggles to restore service
Cloud unicorns are extinct so DiData cloud mess was YOUR fault
Applications need to be built to handle TITSUP incidents
Stop the IoT revolution! We need to figure out packet sizes first
Researchers test 802.15.4 and find we know nuh-think! about large scale sensor network ops
Turnbull should spare us all airline-magazine-grade cloud hype
Box-hugger is not a dirty word, Minister. Box-huggers make the cloud WORK
SanDisk vows: We'll have a 16TB SSD WHOPPER by 2016
Flash WORM has a serious use for archived photos and videos
Astro-boffins start opening universe simulation data
Got a supercomputer? Want to simulate a universe? Here you go
Do you spend ages wasting time because of a bulging rack?
No more cloud-latency tea breaks for you, users! Get a load of THIS
prev story

Whitepapers

Seattle children’s accelerates Citrix login times by 500% with cross-tier insight
Seattle Children’s is a leading research hospital with a large and growing Citrix XenDesktop deployment. See how they used ExtraHop to accelerate launch times.
Getting started with customer-focused identity management
Learn why identity is a fundamental requirement to digital growth, and how without it there is no way to identify and engage customers in a meaningful way.
Why CIOs should rethink endpoint data protection in the age of mobility
Assessing trends in data protection, specifically with respect to mobile devices, BYOD, and remote employees.
Reg Reader Research: SaaS based Email and Office Productivity Tools
Read this Reg reader report which provides advice and guidance for SMBs towards the use of SaaS based email and Office productivity tools.
Website security in corporate America
Find out how you rank among other IT managers testing your website's vulnerabilities.