Sun posts profit as costs fall

Server maker swings to a quarterly profit, beating analyst estimates and sending shares up.
Written by ZDNET Editors, Contributor
Sun Microsystems, the world's third-largest maker of computer servers for businesses, said on Monday it swung to a quarterly profit from a year-earlier loss as it reduced costs, sending the shares higher.

The stock rose 12 percent to $5.47 in extended trading following the earnings report after closing down 0.6 percent at $4.89 on the Nasdaq.

Earnings of 9 cents per share beat the analysts' average estimate of 5 cents per share. Net income was $329 million in the fourth quarter ended June 30, compared with a year-earlier net loss of $301 million, or 9 cents per share.

Revenue rose slightly to $3.84 billion, matching analysts' estimates, from $3.83 billion, while operating expenses fell 25 percent to $1.49 billion.

Sun, which returned to profit in the second and third quarters after five consecutive quarterly losses, has tried to stage a recovery by revamping its product line, selling servers powered by chips from Advanced Micro Devices and Intel, among other moves. The company last year announced about 5,000 job cuts to reduce costs.

Shares of Sun, which also sells workstations, software, storage and services, have fallen 9.2 percent this year, as of Friday's close.

They trade at 54 times expected 2007 earnings per share, a premium to competitors IBM and Hewlett-Packard, which both sell at about 17 times expected earnings.

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