Financial

posted on 01 August 2008 14:31

In another set of poor results evincing prolonged struggle to get profits out of flat revenues, Sun made it clear it hasn't yet found the gold seams it thinks are there to be mined from its product and service strategy.

Revenues for the Q4 fy08 were $3.780 billion, a decrease of 1.4 percent from Q4 fy07's $3.835. Q4 fy08 net income was $88 million ($0.11/share) compared with net income of $329 million ($0.36/share) in Q4 fy07, down 73 percent.

Sun reported full year fy08 revenues of $13.880 billion, an increase of 0.1 percent over fy07. In other words as flat as flat can be. GAAP fy08 net income was $403 million ($0.49/share) compared with fy07's $473 million ($0.52/share), down 17 percent. 

Total gross margin as a percent of revenues for the fy08 was 46.5 percent, an increase of 1.3 percentage points over fy07. Gross margin for the Q4 fy08 was 44.3 percent, a decrease of 2.9 percentage points from Q4 fy07.

Jonathan Schwartz, Sun's CEO, put a brave face on the results: "On a year-over-year basis, we saw significant improvements across a number of key operating metrics ranging from gross margins to non-GAAP earnings per share and cash flow from operations. Despite this progress and strong growth in international geographies, slowing performance in the U.S. impacted top line revenue growth. Looking forward, we remain confident in open source innovation as the accelerant to our growth strategy through increased adoption of our open source offerings - from the OpenSolaris operating system and the MySQL database to the Lustre and ZFS storage systems, the foundation of our open storage platforms."

Sun has been looking for an accelerant for quite some time now.

Full Fiscal Year & Fourth Quarter 2008 Highlights:

- On an annual basis, Sun improved gross margins by 1.3 percentage points, decreased total R&D and SG&A expenses by $70 million, improved non-GAAP net income per share on a diluted basis by 21 percent and increased cash flow from operations by $371 million.
- Sun reported double-digit annual revenue growth in key international markets including Brazil, India, Russia and Greater China.
- Global demand for MySQL continued to accelerate, with billings growth in the fourth quarter of over 44 percent year-over-year.
- Sun's Chip Multi-Threading (CMT) systems delivered 61 percent year-over-year billings growth in Q4, and for fiscal year 2008 was a $1.1 billion dollar business for Sun.
- ZFS, the foundation of Sun's Open Storage product line, saw increased adoption across the globe during the quarter.

The company said conditions in the USA were challenging, particularly in financial services. It did not expect to earn a profit in its current quarter (Q1 fy09) because of this. The shares were marked sharply lower and the market cap is down at the $7.25 billion level.

Sun announced today an additional repurchase of up to $1 billion of the company's outstanding common shares. The existing share repurchase program is almost complete with $36 million funds left out of the $3 billion originally put aside.

^{[Chris Mellor.]}