RealTime IT News

Sun Turns a Lemon into an Orange

Sun Microsystems is starting to see progress in erasing its financial problems, highlighted by its Q1 earnings, released Thursday.

The systems provider beat expectations with a break-even quarter, but revenues ($2.628 billion) came in a little lighter than expected. Sun also recorded a net loss of $174 million or $0.05 per share, which is more than analysts had anticipated. Sun said it would have made more over the last three months, but it spent $82 million in legal fees brought on by its patent dispute with camera and film maker Kodak.

"Even with Kodak, we now have two quarters in a row of year-over-year revenue growth. So I guess you could say that is two in a row for us," CEO Scott McNealy said, pointing to the company's growth in revenue in the previous quarter.

Despite the setback, McNealy said the company is invigorated with the success of its latest contract with Orange SA, the mobile arm of France Telecom . Financial terms of the contract were not disclosed, but Sun said that Orange agreed to a three-year contract to Sun's Java Enterprise System (JES) to replace its current software infrastructure in Europe. The project includes 22,000 employees in France, the UK, Switzerland, Belgium, the Netherlands and Slovakia. Orange UK already is using Sun technology, including 1300 Sun servers, and support services.

Orange said it will use Sun's technology to extend its Wireless ISP, Enhanced WAP Gateway Infrastructure directory to 20 million entries. In France, for example, Orange will initially be using the Sun Java Directory server for its WAP Gateway and Sun Cluster software for Wi-Fi and content billing projects. Mobistar, the Orange group's operation in Belgium, will initially be using Sun's Directory Server for customer registration and access to its Web site.

Sun said the Orange contract is just the latest in a string of customers that have signed up for Sun's JES in the last six months. Withinthe Europe, Middle East and Africa region, Sun said its contracts include Inmarsat, LogicaCMG, Turkcell, Borsa Italiana, E-Plus, EUROCONTROL, Pixelpark AG, and Young Generation.

"In less than one year, there are hundreds of thousands of Java Enterprise System users worldwide, demonstrating the market demand for a simplified software licensing model," John Loiacono, executive vice president of Software at Sun, said in a statement. "Sun is a systems company, and innovations like the Java Enterprise System are part of our long-term strategy to help customers accelerate the delivery of new services, and unleash mobility with security to achieve sustained business advantages."

The contracts emphasize Sun's revitalized efforts with telcos and service providers. Standing on its simplified customer pricing -- USD$100 per employee per year -- Sun showered Wall Street last month with a host of programs that promise greater savings on IT infrastructure.

"We are on the offense again, as a result of our newly revamped product line, a result of our sometimes controversial but continued commitment to R&D investments in the last three years," McNealy said.

The CEO said the company is now putting the finishing touches on its Solaris 10 OS for an official launch in November. The server software is expected to allow companies to run Linux programs in containers without having to change the code. The OS has also been designed to run on AMD's Opteron and SPARC processors.