Sun Microsystems has been declared dead plenty of times. But its most recent quarter shows the company is very much alive — with some of its products even proving hits.
The company reported a net loss of $209 million, or 28 cents per share for the second quarter of its fiscal 2009, ended Dec. 31. That was an improvement over Sun’s (NASDAQ: JAVA) net loss of $1.677 billion, or $2.24 per share, for the previous quarter.
Even more promising is that Sun would have reported a far slimmer loss of only a penny per share, had it not been for a one-time restructuring charge of $222 million, due to layoffs in November that saw 5,000 more jobs slashed from the struggling hardware vendor. Without that charge, Sun would have topped Wall Street expectations of a 9 cent per-share loss before charges, according to Reuters Estimates.
It’s still a far cry from Sun’s performance a year ago, however, when the company posted a profit of $260 million, or 32 cents per share. Revenues for the most recent quarter totaled $3.220 billion, a decrease of 10.9 percent compared with $3.615 billion for the same period a year earlier.
But investors warmed to the fact that Sun is showing some signs of a turnaround in spite of one of the harshest business climates in decades. Shares of the company were trading up 5.56 percent, at $3.99, in aftermarket trading at press time.
While other enterprise vendors have been watching their sales go off a cliff, Sun actually enjoyed some decent gains in the quarter. In several product categories, billings grew at double-digit rates year-over-year, accounting for more than a third of total product billings in the quarter.
High-end servers using Chip Multi-Threading (CMT) grew 31 percent from last year, and is now at an approximately $1.4 billion annual run rate. x64 servers, consisting of both Intel- and AMD-based servers, grew 11 percent year-over-year and is now at an approximately $700 million annual run rate.
Open Storage grew at a rate of 21 percent from the same period a year ago. In particular, Sun has a hit on its hands with the Sun Storage 7000 family, called Amber Road. The systems, launched in November 2008, are built upon the popular ZFS file system and are among the first large-scale enterprise storage systems to use flash-based solid-state drives (SSD).
“I haven’t seen in my career at Sun an opportunity blossom as quickly as this has,” Sun CEO Jonathan Schwartz told the conference call with analysts following the quarterly sales announcement.
Unlike other Sun storage products, such as the X4500 “Thumper” series, Amber Road adds Windows support and includes flash drives for improved performance. ZFS helps optimize the system’s storage in the background, moving popular files to flash while files with less demand get pushed to lower-cost, slower drives.
“The net result is we can deliver tremendous performance benefits at a fraction of the costs of our peers and competitors,” Schwartz said.
Schwartz and CFO Michael Lehman did not offer guidance on the upcoming quarter but said it’s historically down from its second quarter.
Additionally, a large debt comes due in August, but Lehman said the company is “confident we have the financial management to handle the debt’s maturity.”
Update clarifies that Amber Road was among the first enterprise SSD offerings.
