Sun hits its fourth consecutive profitable quarter

Sun Microsystems is on a roll. Open source may well have much to do with that.

Open-source software and hardware vendor Sun Microsystems rolled to a fourth consecutive profitable quarter, the company announced earlier today, reporting revenues for the first quarter of fiscal 2008 of $3.219 billion, an increase of approximately 1 percent as compared with $3.189 billion for the first quarter of fiscal 2007.

Total gross margin as a percent of revenues was 48.5, an increase of 5.0 percentage points, as compared with the first quarter of fiscal 2007. Net income for the first quarter of fiscal 2008 on a GAAP basis was $89 million.

Not bad for a company increasingly inclined to giving its software away. Jonathon Schwartz, CEO of Sun, said:

We showed continued execution and operating discipline and delivered a very solid first quarter with continued revenue growth, profitability and gross margin expansion. We saw particular strength in our high-end systems lineup, good growth in our subscription-based identity management software offerings, and even more adoption and momentum behind the award-winning open source Solaris 10 Operating System and our virtualization offerings. Growth remains our top priority for fiscal 2008 as we look to capitalize on our UltraSPARC T2 servers, delivering outstanding Solaris and Linux performance with extreme energy efficiency.

Sun is demonstrating that some old dogs can learn new tricks. Its emphasis on open source and innovation, in addition to belt-tightening, appears to be paying off.

This is the case, in part, because Sun is not pretending to go through the motions of open source, but is actually investing its brand in open source. This is making its hardware more appealing, and giving its employees a cause to rally around.

Sun still has far to go, but it's showing that it knows the way.

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