Sun shines despite Asia

The company posts a jump in fourth-quarter profits and revenues on record shipments of servers and workstations.

Dawn Kawamoto Former Staff writer, CNET News
Dawn Kawamoto covered enterprise security and financial news relating to technology for CNET News.
Dawn Kawamoto
2 min read
Despite the turmoil in Asia, Sun Microsystems today posted a jump in fourth-quarter profits and revenues, spurred by record shipments of servers and workstations.

Sun reported net income of $273 million, or 69 cents per share, for the quarter, compared to $237.2 million or 61 cents per share a year ago. But excluding a one-time acquisition charge, the company would have posted profits of $288 million, or 73 cents per share.

Analysts had expected the company to report earnings of 71 cents per share, according to First Call.

The company's revenues, meanwhile, Sun at a glance rose to $2.9 billion for the quarter, up 13 percent from a year ago.

"We are delighted with the record revenue and net income levels achieved in both the fourth quarter and fiscal year 1998," said CEO Scott McNealy, in a statement.

Sun posted revenues of $9.79 billion for the year, up 14 percent from the previous year. In addition, net income was $762.9 million, slightly up from $$762.4 million a year earlier. But without one-time charges for both 1998 and 1997, the company would have posted year-end earnings of $906 million, up 23 percent over last year.

Michael E. Lehman, Sun's chief financial officer, said in a statement: "Our record shipments of servers and workstations, combined with investments in our field sales, service, and support organizations, should enable Sun to further capitalize on our market opportunities."

Sun, under chief operating officer Ed Zander, also announced last April a major reorganization that would eliminate individual operating companies and create a set of divisions that would center on products, technologies, and services.

That move was designed to allow Sun to jump on new markets and opportunities in a quicker fashion.

Sun said that the sales of servers are being propelled by new opportunities at cable companies, telcos, and network service providers. The workstation market was fueled by Sun's 2500-series products that compete against Windows NT workstations.

"Dell and Compaq underestimated that department IT managers wouldn't give [graphics and engineering professionals] underpowered machines," said a feisty Zander.

"You have to hand it to them, they had a great quarter," said Dan Niles, an analyst with BancAmerica Robertson Stephens. "They grew revenues in spite of Asia, and given the pretty tough market environment, you have to hand it to them. That's hard to do with a company of that size."

Niles said he was impressed with Sun's performance in the face of the Asian financial crisis. "I think the market will like it, too," he predicted.

Sun's shares rose to 51 in after-hours trading, up from its regular session close of 49-15/16.