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Sun Reports Preliminary Profit For Fiscal Year

Sun Microsystems Inc reported results for its fiscal fourth quarter and full fiscal year, which ended June 30.

Revenues for the fourth quarter grew to $3.11 billion, an increase of 4.3 percent as compared with $2.982 billion for the fourth quarter of fiscal 2003. Total gross margin as a percent of revenues was 39.4 percent, a decrease of 4.3 percentage points as compared with the fourth quarter of fiscal 2003. Net income for the fourth quarter of fiscal 2004 was $795 million or 24 cents per share as compared with a net loss of $1.039 billion or a net loss of 32 cents per share for the fourth quarter of fiscal 2003.

Cash generated from operating activities was $2.172 billion for the quarter, and the balance of cash and marketable securities was $7.608 billion.

For the full 2004 fiscal year, Sun reported revenues of $11.185 billion, a decline of 2.2 percent as compared with $11.434 billion for the full 2003 fiscal year. Total gross margin as a percent of revenues was 40.4 percent, a decline of 2.8 percentage points as compared with the 2003 fiscal year. The net loss for fiscal year 2004 was $376 million or a net loss of 11 cents per share as compared with a net loss of $3.429 billion or a net loss of $1.07 per share for the 2003 fiscal year.

Results reported include $1.6 billion of other income, and $350 million in deferred other income related to the Microsoft settlement. Sun has sought confirmation of certain aspects of its accounting relating to this settlement from the Securities and Exchange Commission. Financial results are pending final resolution of these matters.

Steve McGowan, Sun's chief financial officer and executive vice president, corporate resources, said, "We're pleased we grew revenue in fiscal Q4 based on consistent demand throughout the quarter across geographies and products. We're also pleased that we generated $2.2 billion in cash from operations in fiscal 2004 and ended the year with a cash and marketable securities balance in excess of $7.6 billion. This marks the 15th consecutive fiscal year that Sun has generated positive cash flow from operations."

"Delivering growth and preliminary profits in Q4 is a great way to end the year, with 46 percent server unit volume growth year-over-year and a sequential increase of 18 percent," said Scott McNealy, chairman and chief executive officer of Sun Microsystems Inc. "We enter the new fiscal year with a strong balance sheet, the strongest product and services portfolio in our history, and the largest developer and partner communities we've ever had. We're delivering innovations based on some of the industry's most coveted technologies, Solaris OS and Java platform, running on industry standard SPARC, AMD Opteron and Intel Xeon processors. In fiscal 2005, we're focused on growing revenue and market share, generating cash, achieving sustained profitability and rewarding long-term shareholders."

"Let's start putting some questions to rest," said Jonathan Schwartz, president and chief operating officer of Sun Microsystems Inc. "With the 74 percent sequential increase in Java Enterprise System subscribers, now totaling 303,000, we've made progress in both monetizing Java technology and driving long-term savings for customers. In addition, Solaris OS volumes and OEM support on industry standard AMD and Intel platforms grew at an accelerated pace, with a 25 percent increase in Solaris x86 registered licenses to almost 1.1 million and a 69 percent sequential increase in Software Express for Solaris x86. We are now unquestionably on the offensive, with powerful resources at our disposal, and an excellent product calendar."

About Sun Microsystems Inc

Since its inception in 1982, a singular vision -- "The Network Is The Computer" -- has propelled Sun Microsystems Inc to its position as a leading provider of industrial-strength hardware, software and services that make the Net work. Sun can be found in more than 100 countries and on the World Wide Web at sun.com.