Sun's Aussie revenues take $100m hit

Sun Microsystem's annual Australian product revenues have fallen by around a third for the year to 30 June 2008.

Sun Microsystem's annual Australian product revenues have fallen by around a third for the year to 30 June 2008.

Duncan Bennet, MD of Sun Microsystems in Australia & NZ.
(Credit: Sun)

Although the money which the company has gained from providing services and management fees has remained the same, its revenues from selling its products has taken an almost $100 million drop from $354,401,350 in 2007 to $259,420,249 in 2008, according to annual results obtained from ASIC.

According to Australian managing director Duncan Bennet, the drop is due to unusually high revenues last year caused by a deal with Telstra.

"The decline in current year revenue over financial year 2007 was in line with expectations and was a result of the business returning to normal operating levels after a once-off revenue spike from a large, single sale to Telstra during 2007," he said.

Total revenues (including management fees and the rendering of services as well as the products sales figure from above) were $381 million in 2005, $392 million in 2006, $567 million in 2007 and $462 million in 2008.

The net profit has grown by 750 per cent even after excluding profits from an integration of an acquisition, a spokesperson for the company pointed out.

"Sun Microsystems is delighted with the results for Sun Australia and in FY08 Sun made an $18.6m profit," Bennet said.

Phil Hassey, vice president of services and Australian company manager of analyst firm Springboard Research said that although Bennet had a point, the company should have tried to build on the success of Telstra, calling its failure to up the ante "disappointing".

"If they're flattish in good times, how are they going to grow momentum in the current economic climate?" he asked. He said that Sun's current corporate situation, where it is trying to cut 15 to 18 per cent of its global workforce would make it difficult for the company to power up its results in the future.

The Australian dollar's fall would also make the company's path a difficult one, he said. Already many vendors, including Sun, confessed that they had put their prices up, which local chief information officers have said they would be factoring into their budget, perhaps cancelling or delaying purchases.

Bennet, however, told at a lunch recently that he was confident in the face of the crisis since he believed that companies would begin a move to open source, of which Sun has been an advocate.

Hassey wasn't sure that would work out as Bennet thought. "I'm pretty confident that there will be a push to open source, but will they go to Sun?" he said.


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