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Sun leaps over 4Q forecasts, sees rosier 2001

Sun Microsystems (Nasdaq: SUNW) easily topped the consensus analyst estimate in the fourth quarter and raised its sales expectations for the next fiscal year.

After market close Thursday, the servers, workstations, software and network storage reported fiscal fourth quarter net income of $659.5 million, or 39 cents per share, excluding one-time events. First Call's survey of 21 analysts predicted a profit of 33 cents per share for Sun's fiscal fourth quarter, ended June 30.

And with bookings up 54 percent for the quarter, Sun expects even more in the future. The company now sees annual revenue growth "pushing" 30 percent in fiscal 2001, with especially strong growth in the first half, CFO Michael Lehman said in a conference call with analysts.

Sun previously expected 25 percent revenue growth in 2001.

Year-over-year revenue growth has accelerated in each of the last four quarters for Sun, including 25 percent in the first quarter, 27 percent in the second, 35 percent in the third and 42 percent in the results reported Thursday.

Shares of Sun rose 4 1/8 to 98 in Thursday's regular trading ahead of the earnings report. In afterhours activity following the fourth quarter release, shares of Sun traded at 103 7/8 on the Island electronic communications network.

Including $95.8 million from equity sales and acquisition-related expenses of $3.1 million, Sun earned $720.4 million, or 42 cents per share. Investments are an important part of Sun's strategy, but "should be separately reported due to the non-recurring and unpredictable nature of them," COO Ed Zander yet, perhaps alluding to a recent habit by Intel (Nasdaq: INTC) of including investment gains as operating income.

Fourth quarter revenue increased to more than $5 billion, a 42 percent gain year-over-year. The company reported broad gains in all product lines, including strong gains in servers against Hewlett-Packard (NYSE: HWP) and IBM (NYSE: IBM). "There's no way we're not gaining share against the major players, big-time," CEO Scott McNealy told analysts.

Sun shipped 100,000 servers in the fourth quarter, Zander said. "We talk to our customers and partners every day about Sun, and it seems every day HP and IBM are also talking about Sun," he said. "And that's the way we like it."

All categories of servers saw at least 60 percent growth, and some as high as 100 percent, Zander said.

Company executives said they would prefer to "let the numbers do the talking", but they couldn't refrain entirely from making their usual criticisms of competitors. Unlike companies that have announced initiatives such as WebSphere and Microsoft.NET, Sun already provides a complete suite of network services and applications, McNealy said.

"We really have created a Sun.net platform today, and it's shipping," he said.

During the fourth quarter, Sun spent $147 million to repurchase 1.8 million shares.

Sun was expected to report strong earnings. One of Sun's major subcontractors, Celstica (NYSE: CLS) on Wednesday reported quarterly earnings that easily hurdled estimates in third quarter results.

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