Sun reported revenue of $2.9 billion for the period ending Dec. 28, slightly down from $2.91 billion from a year ago. That beat analysts' revenue expectations of $2.7 billion, according to Thomson First Call.
The computer maker also posted a $125 million net loss, or 4 cents a share, compared with a loss of $2.3 billion, or 72 cents a share, a year ago. Wall Street analysts had been expecting the company to report a loss of 5 cents a share, according to First Call.
Sun Chief Executive Scott McNealy described the quarter as one of progress.
"Last quarter we were on track with what we wanted to get done," McNealy said during a conference call with analysts. "Our focus continues to be driving costs out of the system...we're re-engineering to drive efficiency and costs out of our system."
Although Sun posted a stronger than-expected-quarter, McNealy was hard pressed to pinpoint the reasons why. Sun did not offer any special discounts during the quarter, and its channel inventory was not substantially up.
"I can't give a specific answer," McNealy said. "We had some negative press and analysts' reports during the summer and spring...but when people understood we'll still be around, it may have released some pent-up demand. That is the biggest single thing I would argue."
McNealy, however, noted that when Sun, it provided a "nice bump" to the company's x86 business.
"We needed that affirmation because we were five or six years late in the x86. It's a good thing our timing was right with AMD, so we believe we will be the premier brand on AMD," McNealy said.
Sun rivals Hewlett-Packard, Dell and IBM have sold servers using "x86" processors such as Intel's Xeon for years, but until recently Sun sold only systems using its own UltraSparc chips.
Shares of Sun were slightly up in after-hours trading at $5.38. During the regular session, Sun closed down 10 cents, or about 1.8 percent, to end the day at $5.36.