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Brief: Sun Has Some Things Going Its Way

Last week brought an intriguing new product, and a sales jump
Sun Microsystems last week showed it has a few things going for it: fresh products and, for the first time in a while, momentum. Now it needs to make a profit.

Andy Bechtolsheim, Sun's legendary designer, recently returned to the company to help spark new products. One is Thumper, a supersized storage server built with Advanced Micro Devices' Opteron processor and lots of disk space. Last week, Sun showed off Thumper combined with Greenplum's Bizgres, a parallelized version of the PostgreSQL open source database. Together, the two make a data warehousing appliance that sells for $20,000 a terabyte, compared with $500,000 for other systems. It's the kind of innovation on lower-priced systems Sun likes to talk about.

The strategy's beginning to show results. Sun's fiscal fourth-quarter revenue rose 29% year over year, and 21% from the prior quarter. Quarterly revenue hit $3.8 billion, and fiscal year sales were $13.1 billion. CEO Jonathan Schwartz cites acceptance of the Solaris 10 operating system, with more than 5 million licenses, and growth in Sun's new x86-based Galaxy and UltraSparc T1-based Niagara lines. Niagara passed $100 million in quarterly sales.

The company still lost $301 million, its fourth straight quarter in the red. That was due in large part to acquisition costs, expensing options, and $228 million in restructuring charges. Sun plans about 5,000 layoffs this year. The company still has problems to clean up. But it also has some things going its way of late.