Sun's Q4 Revenue Tops US$5 Billion

For the three-month period ended June 30, 2000, the U.S. hardware, software and services vendor reported net income up 67 percent to reach $US659.5 million on revenue up 42 percent at $US5.02 billion compared with last year, Sun executives said on a conference call on Thursday afternoon.

"It was a truly incredible quarter and fiscal year," said Ed Zander, Sun's president and chief operating officer, adding that the company's growth rate was the highest for a decade. "We are now the number one Internet infrastructure provider for large enterprises worldwide."

"We're the network platform of choice for service providers, bricksters wanting to be clicksters and clicksters," added Scott McNealy, Sun chairman and chief executive officer.

Zander said that much of Sun's growth came from "stunning market share gains" over the company's nearest competitors IBM and Hewlett-Packard, Sun is also a "markedly different company than it was a year ago," he explained. In addition to its traditional server business, the vendor has expanded further into areas including middleware, storage and professional services, with the latter segment growing more than 50 percent in the fourth quarter.

"We've done the same we've done for the last 18-and-a-half years -- stayed focused and executed, we've not veered," McNealy said. "With (our products) Solaris, Java, Jini, iPlanet and Forte, we've already created a Sun.Net platform today which is being used to run the Internet." His remark was a swipe against bitter rival Microsoft, which last month unveiled Microsoft .Net, a Web software initiative.

"Demand (for our products) continued to be greater than we forecast across our product line and geographies," said Michael Lehman, Sun vice president of corporate resources and chief financial officer. "We had very meaningful growth in all geographies."

The backlog for Sun's products grew by $US600 million in the fourth quarter, Lehman added.

"We want to get the backlog down," Zander said, adding that a key internal Sun initiative going forward is for the company to be better able to forecast demand.

Sun's earnings per share for the fourth quarter were 39 cents, topping the 33 cents estimate of 21 analysts polled by First Call/Thomson Financial. The vendor's strong quarterly net income and earnings per share were helped by a $US92.7 million net gain from special items including the sale of equity investments. Factoring in the special items, Sun recorded net income of $US720.4 million and earnings per share of $US42 cents.

For fiscal 2000 as a whole, Sun announced net income, excluding special items, of $US1.7 billion, up 49 percent on the year-ago quarter, while revenue rose 33 percent to $US15.7 billion. Earnings per share, excluding special items, were $US1.02, again above the forecast of 21 analysts polled by First Call, who estimated Sun's earnings per share would be 96 cents. Including the special items such as acquisition-related charges, Sun's fiscal 2000 net income was $US1.8 billion and earnings per share were $US1.10.

Looking at Sun's product line, the company's computer systems business set records shipping 100,000 servers during the fourth quarter, the kind of volumes "synonymous with PCs," according to Zander. The vendor shipped 500 of its high-end Enterprise 10000 servers in the quarter, he said.

Looking ahead, Sun's UltraSparc III chip is on track, he said -- the processor will power the next generation of the company's servers. "It's down to test, test, test," Zander said. "We'll have a completely new product line (based on UltraSparc III) a year from now," added McNealy.

Sun is making strides in its storage business, Zander said, mentioning that market incumbents such as EMC are spending time discussing Sun's Purple device. The vendor announced its StorEdge T3 Array, also known as Purple, in the middle of last month.

Turning to software, on Wednesday, Sun announced plans to open source its StarOffice productivity applications suite, as well as saying that StarPortal, the Web-based version of the suite has fallen somewhat behind delivery schedule and is still being tested. StarPortal was due to appear in the first half of this year, Sun now hopes to launch the software in the September time frame.

Zander said that 150 companies have signed up for early access to StarPortal and that there have been 300,000 downloads of the latest version of StarOffice.

Sun released its results after the markets closed. The company's shares ended trading Thursday at $US98.06, up 4.4 percent on Wednesday's market close.

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