Back in black at Sun

Back in black at Sun

Sun Microsystems, fresh from news of a renewed alliance with chip maker Intel, reported its first quarterly profit in more than a year.

Sun posted net income of US$126 million on a seven percent gain in revenue to $3.5 billion, in its fiscal 2007 second quarter ended December 31, 2006.

Sun reported a net loss of US$223 million on revenue of $3.3 billion in the year-earlier quarter, and a net loss of $56 million on revenue of $3.1 billion in the previous quarter.

Sun attributed the revenue gain to strong sales of its x64 line of servers powered by Advanced Micro Devices (AMD) processors as well as growing acceptance of its Solaris 10 operating system.

The earnings report follows the announcement by Sun and Intel to form an alliance to promote each other's core products. Sun will build a line of servers and workstations with Intel chips, including a dual-processor Xeon system expected by the end of June. Intel, in return, has agreed to promote the Sun Solaris OS. Sun stopped buying Intel processors in 2003 when it switched to AMD's Opteron line. Sun also makes its own processors, called Sparc and UltraSparc.

Sun has undergone a restructuring under chief executive officer Jonathan Schwartz, who succeeded Scott McNealy in April, 2006. McNealy remains chairman. Sun eliminated 5000 jobs but also acquired StorageTek, giving it a foothold in the storage business. Sun has also grown server sales. In the third quarter of 2006, it ranked fourth among major server vendors in sales, but it recorded a strong 15.8 percent sales increase from the year-earlier period, according to an IDC research report.

"Sun's financial performance this quarter demonstrates that our strategy and discipline are paying off," Schwartz said in a prepared statement.

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