Sun Reports Record Profits

Growth in network computing markets helped Sun Microsystems Inc. report record results for its fiscal fourth quarter.

In an earnings report yesterday, the company posted record revenue of $3.5 billion for the fourth quarter ended June 30, up 22% from the same period in 1998. Net income for the quarter reached an all-time high of $395 million, a 37% increase from $288 million in the 1998 period, excluding a charge related to an acquisition. Earnings per share totaled 48 cents, 1 cent above the mean analyst estimate.

For the full 1999 fiscal year, the maker of Unix-based computing systems reported revenue of $11.73 billion, up 20% from the previous year. Net income for the fiscal year was $1.16 billion, up 28% from the previous year and the first time that Sun's net income has been above $1 billion.

"Sun's success has come as a direct result of our relentless focus on network computing," says CEO Scott McNealy. "Everything we do is explicitly aimed at providing the products, technologies, and services for companies to harness the power of the Internet and transform their business to an online services-driven model."

Sun says it had record shipments during the quarter, as well as strong growth in newer markets such as E-commerce and communications service providers.

In the first quarter of this year, Sun had the largest share in the worldwide Unix server market, with a 28% share in factory revenue and a 30% share in shipments. Sun's competitors, IBM and Hewlett-Packard, lost a share of the market in both factory revenues and shipments in the first quarter.

Sun's growth rate has been especially fast in the high-end total server market (systems priced on average above $1 million). Sun's product line in this area, led by its Enterprise 10000 Server, also known as Starfire, had a 100% growth in shipments in the first quarter of this year vs. the same period in 1998.